Correlation Between Kits Eyecare and Apple

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

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

Diversification Opportunities for Kits Eyecare and Apple

-0.55

Correlation Coefficient

Kits Eyecare  Apple

Excellent diversification

The 3 months correlation between Kits and Apple is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kits Eyecare and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Kits Eyecare 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 Kits Eyecare 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 CDR has no effect on the direction of Kits Eyecare i.e., Kits Eyecare and Apple go up and down completely randomly.

Pair Corralation between Kits Eyecare and Apple

Assuming the 90 days trading horizon Kits Eyecare is expected to generate 1.68 times more return on investment than Apple. However, Kits Eyecare is 1.68 times more volatile than Apple Inc CDR. It trades about 0.2 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.13 per unit of risk. If you would invest  837.00  in Kits Eyecare on December 29, 2024 and sell it today you would earn a total of  349.00  from holding Kits Eyecare or generate 41.7% return on investment over 90 days.

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

Kits Eyecare  vs.  Apple Inc CDR

Kits Eyecare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kits Eyecare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Kits Eyecare displayed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kits Eyecare and Apple

The main advantage of trading using opposite Kits Eyecare and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kits Eyecare 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 Kits Eyecare and Apple Inc CDR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .