Correlation Between CN MODERN and Apple
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Apple at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CN MODERN and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Apple Inc, you can compare the effects of market volatilities on CN MODERN and Apple and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CN MODERN with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Apple.
Diversification Opportunities for CN MODERN and Apple
Very weak diversification
The 3 months correlation between 07M and Apple is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CN MODERN is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CN MODERN DAIRY are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of CN MODERN i.e., CN MODERN and Apple go up and down completely randomly.
Pair Corralation between CN MODERN and Apple
Assuming the 90 days trading horizon CN MODERN is expected to generate 1.85 times less return on investment than Apple. In addition to that, CN MODERN is 1.85 times more volatile than Apple Inc. It trades about 0.03 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.1 per unit of volatility. If you would invest 12,278 in Apple Inc on September 22, 2024 and sell it today you would earn a total of 11,482 from holding Apple Inc or generate 93.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Apple Inc
Performance |
| Timeline |
| CN MODERN DAIRY |
| Apple Inc |
CN MODERN and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Apple
The main advantage of trading using opposite CN MODERN and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Apple can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Apple will offset losses from the drop in Apple's long position.The idea behind CN MODERN DAIRY and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Apple vs. CN MODERN DAIRY | Apple vs. Performance Food Group | Apple vs. Food Life Companies | Apple vs. AUSNUTRIA DAIRY |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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