Correlation Between Apple and Clarke

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

By analyzing existing cross correlation between Apple Inc CDR and Clarke Inc, you can compare the effects of market volatilities on Apple and Clarke 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 Clarke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Clarke.

Diversification Opportunities for Apple and Clarke

-0.63

Correlation Coefficient

Apple  Clarke

Excellent diversification

The 3 months correlation between Apple and Clarke is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Clarke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarke Inc 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 CDR are associated (or correlated) with Clarke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarke Inc has no effect on the direction of Apple i.e., Apple and Clarke go up and down completely randomly.

Pair Corralation between Apple and Clarke

Assuming the 90 days trading horizon Apple is expected to generate 2.02 times less return on investment than Clarke. But when comparing it to its historical volatility, Apple Inc CDR is 1.37 times less risky than Clarke. It trades about 0.08 of its potential returns per unit of risk. Clarke Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,390  in Clarke Inc on October 7, 2024 and sell it today you would earn a total of  970.00  from holding Clarke Inc or generate 69.78% return on investment over 90 days.

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

Apple Inc CDR  vs.  Clarke Inc

Apple Inc CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Clarke Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clarke Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Clarke is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Apple and Clarke

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

The idea behind Apple Inc CDR and Clarke 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.