Correlation Between Apple and Patria Investments

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

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

Diversification Opportunities for Apple and Patria Investments

0.73

Correlation Coefficient

Apple  Patria Investments

Poor diversification

The 3 months correlation between Apple and Patria is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Apple i.e., Apple and Patria Investments go up and down completely randomly.

Pair Corralation between Apple and Patria Investments

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Patria Investments. In addition to that, Apple is 1.29 times more volatile than Patria Investments Limited. It trades about -0.48 of its total potential returns per unit of risk. Patria Investments Limited is currently generating about -0.15 per unit of volatility. If you would invest  3,589  in Patria Investments Limited on October 23, 2024 and sell it today you would lose (108.00) from holding Patria Investments Limited or give up 3.01% of portfolio value over 90 days.

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

Apple Inc  vs.  Patria Investments Limited

Apple Inc

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Patria Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and Patria Investments

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

The idea behind Apple Inc and Patria Investments Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.