Correlation Between GALP ENERGIA and Apple
Can any of the company-specific risk be diversified away by investing in both GALP ENERGIA 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 GALP ENERGIA and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GALP ENERGIA B and Apple Inc, you can compare the effects of market volatilities on GALP ENERGIA 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 GALP ENERGIA with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of GALP ENERGIA and Apple.
Diversification Opportunities for GALP ENERGIA and Apple
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GALP and Apple is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GALP ENERGIA B and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and GALP ENERGIA 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 GALP ENERGIA B 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 GALP ENERGIA i.e., GALP ENERGIA and Apple go up and down completely randomly.
Pair Corralation between GALP ENERGIA and Apple
Assuming the 90 days trading horizon GALP ENERGIA B is expected to generate 1.87 times more return on investment than Apple. However, GALP ENERGIA is 1.87 times more volatile than Apple Inc. It trades about 0.12 of its potential returns per unit of risk. Apple Inc is currently generating about -0.43 per unit of risk. If you would invest 1,609 in GALP ENERGIA B on October 22, 2024 and sell it today you would earn a total of 72.00 from holding GALP ENERGIA B or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GALP ENERGIA B vs. Apple Inc
Performance |
| Timeline |
| GALP ENERGIA B |
| Apple Inc |
GALP ENERGIA and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GALP ENERGIA and Apple
The main advantage of trading using opposite GALP ENERGIA and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GALP ENERGIA 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.| GALP ENERGIA vs. Apple Inc | GALP ENERGIA vs. Apple Inc | GALP ENERGIA vs. Apple Inc | GALP ENERGIA vs. Apple Inc |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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