Correlation Between Apple and CLP Holdings

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

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

Diversification Opportunities for Apple and CLP Holdings

0.22

Correlation Coefficient

Apple  CLP Holdings

Modest diversification

The 3 months correlation between Apple and CLP is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CLP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLP Holdings 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 are associated (or correlated) with CLP Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLP Holdings has no effect on the direction of Apple i.e., Apple and CLP Holdings go up and down completely randomly.

Pair Corralation between Apple and CLP Holdings

Given the investment horizon of 90 days Apple Inc is expected to under-perform the CLP Holdings. In addition to that, Apple is 1.82 times more volatile than CLP Holdings. It trades about -0.13 of its total potential returns per unit of risk. CLP Holdings is currently generating about 0.02 per unit of volatility. If you would invest  811.00  in CLP Holdings on December 18, 2024 and sell it today you would earn a total of  8.00  from holding CLP Holdings or generate 0.99% return on investment over 90 days.

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

Apple Inc  vs.  CLP Holdings

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CLP Holdings

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLP Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, CLP Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and CLP Holdings

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

The idea behind Apple Inc and CLP Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.