Correlation Between Berkshire Hathaway and Aptitude Software

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Aptitude Software 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 Berkshire Hathaway and Aptitude Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway and Aptitude Software Group, you can compare the effects of market volatilities on Berkshire Hathaway and Aptitude Software 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 Berkshire Hathaway with a short position of Aptitude Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Aptitude Software.

Diversification Opportunities for Berkshire Hathaway and Aptitude Software

-0.33

Correlation Coefficient

Berkshire Hathaway  Aptitude Software

Very good diversification

The 3 months correlation between Berkshire and Aptitude is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Aptitude Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptitude Software and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Aptitude Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptitude Software has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Aptitude Software go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Aptitude Software

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.53 times more return on investment than Aptitude Software. However, Berkshire Hathaway is 1.89 times less risky than Aptitude Software. It trades about 0.08 of its potential returns per unit of risk. Aptitude Software Group is currently generating about 0.03 per unit of risk. If you would invest  36,450  in Berkshire Hathaway on October 9, 2024 and sell it today you would earn a total of  9,150  from holding Berkshire Hathaway or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Berkshire Hathaway  vs.  Aptitude Software Group

Berkshire Hathaway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkshire Hathaway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aptitude Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptitude Software Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aptitude Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Berkshire Hathaway and Aptitude Software

The main advantage of trading using opposite Berkshire Hathaway and Aptitude Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Aptitude Software 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 Aptitude Software will offset losses from the drop in Aptitude Software's long position.

The idea behind Berkshire Hathaway and Aptitude Software Group 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.