Correlation Between Apple and Profound Medical

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

Diversification Opportunities for Apple and Profound Medical

-0.26

Correlation Coefficient

Apple  Profound Medical

Very good diversification

The 3 months correlation between Apple and Profound is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp 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 Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of Apple i.e., Apple and Profound Medical go up and down completely randomly.

Pair Corralation between Apple and Profound Medical

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.33 times more return on investment than Profound Medical. However, Apple Inc CDR is 3.02 times less risky than Profound Medical. It trades about 0.21 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.02 per unit of risk. If you would invest  3,265  in Apple Inc CDR on October 7, 2024 and sell it today you would earn a total of  298.00  from holding Apple Inc CDR or generate 9.13% 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.  Profound Medical Corp

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 abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Profound Medical Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Profound Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and Profound Medical

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

The idea behind Apple Inc CDR and Profound Medical Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.