Correlation Between Compania and Apple
Can any of the company-specific risk be diversified away by investing in both Compania 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 Compania and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Transporte and Apple Inc DRC, you can compare the effects of market volatilities on Compania 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 Compania with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Apple.
Diversification Opportunities for Compania and Apple
Pay attention - limited upside
The 3 months correlation between Compania and Apple is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC and Compania 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 Compania de Transporte 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 DRC has no effect on the direction of Compania i.e., Compania and Apple go up and down completely randomly.
Pair Corralation between Compania and Apple
Assuming the 90 days trading horizon Compania de Transporte is expected to generate 2.27 times more return on investment than Apple. However, Compania is 2.27 times more volatile than Apple Inc DRC. It trades about 0.16 of its potential returns per unit of risk. Apple Inc DRC is currently generating about -0.2 per unit of risk. If you would invest 185,000 in Compania de Transporte on August 29, 2024 and sell it today you would earn a total of 33,000 from holding Compania de Transporte or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Apple Inc DRC
Performance |
| Timeline |
| Compania de Transporte |
| Apple Inc DRC |
Compania and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Apple
The main advantage of trading using opposite Compania and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania 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.| Compania vs. Pampa Energia SA | Compania vs. Vista Energy, SAB | Compania vs. United States Steel | Compania vs. Central Puerto SA |
| Apple vs. Agrometal SAI | Apple vs. Harmony Gold Mining | Apple vs. Transportadora de Gas | Apple vs. Compania de Transporte |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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