Correlation Between GALP ENERGIA and Apple

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

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

Diversification Opportunities for GALP ENERGIA and Apple

-0.31

Correlation Coefficient

GALP ENERGIA  Apple

Very good diversification

The 3 months correlation between GALP and Apple is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GALP ENERGIA B and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and GALP ENERGIA 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 GALP ENERGIA B 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 GALP ENERGIA i.e., GALP ENERGIA and Apple go up and down completely randomly.

Pair Corralation between GALP ENERGIA and Apple

Assuming the 90 days trading horizon GALP ENERGIA is expected to generate 1.42 times less return on investment than Apple. In addition to that, GALP ENERGIA is 2.14 times more volatile than Apple Inc. It trades about 0.21 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.65 per unit of volatility. If you would invest  21,530  in Apple Inc on September 21, 2024 and sell it today you would earn a total of  2,640  from holding Apple Inc or generate 12.26% return on investment over 90 days.

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

GALP ENERGIA B   vs.  Apple Inc

GALP ENERGIA B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GALP ENERGIA B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GALP ENERGIA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GALP ENERGIA and Apple

The main advantage of trading using opposite GALP ENERGIA and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GALP ENERGIA 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 GALP ENERGIA B 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.