Correlation Between Apple and Computer Modelling

Can any of the company-specific risk be diversified away by investing in both Apple and Computer Modelling 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 Computer Modelling 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 Computer Modelling Group, you can compare the effects of market volatilities on Apple and Computer Modelling 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 Computer Modelling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Computer Modelling.

Diversification Opportunities for Apple and Computer Modelling

-0.23

Correlation Coefficient

Apple  Computer Modelling

Very good diversification

The 3 months correlation between Apple and Computer is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Computer Modelling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Modelling 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 Computer Modelling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Modelling has no effect on the direction of Apple i.e., Apple and Computer Modelling go up and down completely randomly.

Pair Corralation between Apple and Computer Modelling

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.47 times more return on investment than Computer Modelling. However, Apple Inc CDR is 2.15 times less risky than Computer Modelling. It trades about 0.14 of its potential returns per unit of risk. Computer Modelling Group is currently generating about -0.03 per unit of risk. If you would invest  3,270  in Apple Inc CDR on September 12, 2024 and sell it today you would earn a total of  360.00  from holding Apple Inc CDR or generate 11.01% return on investment over 90 days.

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

Apple Inc CDR  vs.  Computer Modelling Group

Apple Inc CDR

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 11 (%) 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 January 2025.

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apple and Computer Modelling

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

The idea behind Apple Inc CDR and Computer Modelling 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.