Correlation Between Apple and COFACE SA
Can any of the company-specific risk be diversified away by investing in both Apple and COFACE SA 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 Apple and COFACE SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and COFACE SA, you can compare the effects of market volatilities on Apple and COFACE SA 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 Apple with a short position of COFACE SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and COFACE SA.
Diversification Opportunities for Apple and COFACE SA
Excellent diversification
The 3 months correlation between Apple and COFACE is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and COFACE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFACE SA and Apple 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 Apple Inc are associated (or correlated) with COFACE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFACE SA has no effect on the direction of Apple i.e., Apple and COFACE SA go up and down completely randomly.
Pair Corralation between Apple and COFACE SA
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.94 times more return on investment than COFACE SA. However, Apple Inc is 1.07 times less risky than COFACE SA. It trades about 0.15 of its potential returns per unit of risk. COFACE SA is currently generating about 0.02 per unit of risk. If you would invest 16,206 in Apple Inc on September 24, 2024 and sell it today you would earn a total of 7,554 from holding Apple Inc or generate 46.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. COFACE SA
Performance |
| Timeline |
| Apple Inc |
| COFACE SA |
Apple and COFACE SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and COFACE SA
The main advantage of trading using opposite Apple and COFACE SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, COFACE SA 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 COFACE SA will offset losses from the drop in COFACE SA's long position.The idea behind Apple Inc and COFACE SA 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.| COFACE SA vs. Sterling Construction | COFACE SA vs. SENECA FOODS A | COFACE SA vs. National Beverage Corp | COFACE SA vs. Dairy Farm International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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