Correlation Between Commercial Vehicle and Apple

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

By analyzing existing cross correlation between Commercial Vehicle Group and Apple Inc, you can compare the effects of market volatilities on Commercial Vehicle and Apple 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 Commercial Vehicle with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Apple.

Diversification Opportunities for Commercial Vehicle and Apple

-0.69

Correlation Coefficient

Commercial Vehicle  Apple

Excellent diversification

The 3 months correlation between Commercial and Apple is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Apple go up and down completely randomly.

Pair Corralation between Commercial Vehicle and Apple

Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the Apple. In addition to that, Commercial Vehicle is 2.38 times more volatile than Apple Inc. It trades about -0.17 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.1 per unit of volatility. If you would invest  20,725  in Apple Inc on September 2, 2024 and sell it today you would earn a total of  1,710  from holding Apple Inc or generate 8.25% return on investment over 90 days.

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

Commercial Vehicle Group  vs.  Apple Inc

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Commercial Vehicle and Apple

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

The idea behind Commercial Vehicle Group and Apple Inc 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.