Correlation Between Apple and Rubicon Organics

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

Diversification Opportunities for Apple and Rubicon Organics

0.47

Correlation Coefficient

Apple  Rubicon Organics

Very weak diversification

The 3 months correlation between Apple and Rubicon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Apple i.e., Apple and Rubicon Organics go up and down completely randomly.

Pair Corralation between Apple and Rubicon Organics

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Rubicon Organics. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 3.91 times less risky than Rubicon Organics. The stock trades about -0.07 of its potential returns per unit of risk. The Rubicon Organics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Rubicon Organics on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Rubicon Organics or generate 5.13% return on investment over 90 days.

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

Apple Inc CDR  vs.  Rubicon Organics

Apple Inc CDR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 8 (%) 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.

Rubicon Organics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, Rubicon Organics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Apple and Rubicon Organics

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

The idea behind Apple Inc CDR and Rubicon Organics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.