Correlation Between Apple and Cia Brasileira

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

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

Diversification Opportunities for Apple and Cia Brasileira

0.64

Correlation Coefficient

Apple  Cia Brasileira

Poor diversification

The 3 months correlation between Apple and Cia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Cia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia Brasileira de 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 Cia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia Brasileira de has no effect on the direction of Apple i.e., Apple and Cia Brasileira go up and down completely randomly.

Pair Corralation between Apple and Cia Brasileira

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.34 times more return on investment than Cia Brasileira. However, Apple Inc is 2.96 times less risky than Cia Brasileira. It trades about 0.28 of its potential returns per unit of risk. Cia Brasileira de is currently generating about 0.09 per unit of risk. If you would invest  5,933  in Apple Inc on September 17, 2024 and sell it today you would earn a total of  1,582  from holding Apple Inc or generate 26.66% return on investment over 90 days.

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

Apple Inc  vs.  Cia Brasileira de

Apple Inc

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Cia Brasileira de

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cia Brasileira de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cia Brasileira unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Cia Brasileira

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

The idea behind Apple Inc and Cia Brasileira de 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.