Correlation Between Apple and Compagnie

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

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

Diversification Opportunities for Apple and Compagnie

0.4

Correlation Coefficient

Apple  Compagnie

Very weak diversification

The 3 months correlation between Apple and Compagnie is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Apple i.e., Apple and Compagnie go up and down completely randomly.

Pair Corralation between Apple and Compagnie

Assuming the 90 days trading horizon Apple Inc is expected to generate 1.0 times more return on investment than Compagnie. However, Apple is 1.0 times more volatile than Compagnie de Saint Gobain. It trades about 0.18 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.08 per unit of risk. If you would invest  20,915  in Apple Inc on October 10, 2024 and sell it today you would earn a total of  2,535  from holding Apple Inc or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Apple Inc  vs.  Compagnie de Saint Gobain

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Compagnie de Saint

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Compagnie de Saint Gobain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Compagnie is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and Compagnie

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

The idea behind Apple Inc and Compagnie de Saint Gobain 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..