Correlation Between Companhia Energtica and Apple
Can any of the company-specific risk be diversified away by investing in both Companhia Energtica 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 Companhia Energtica and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Energtica de and Apple Inc, you can compare the effects of market volatilities on Companhia Energtica 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 Companhia Energtica with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Energtica and Apple.
Diversification Opportunities for Companhia Energtica and Apple
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Companhia and Apple is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Energtica de and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Companhia Energtica 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 Companhia Energtica de 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 Companhia Energtica i.e., Companhia Energtica and Apple go up and down completely randomly.
Pair Corralation between Companhia Energtica and Apple
Assuming the 90 days trading horizon Companhia Energtica is expected to generate 20.06 times less return on investment than Apple. But when comparing it to its historical volatility, Companhia Energtica de is 67.66 times less risky than Apple. It trades about 0.22 of its potential returns per unit of risk. Apple Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 283,404 in Apple Inc on January 26, 2024 and sell it today you would earn a total of 4,839 from holding Apple Inc or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Energtica de vs. Apple Inc
Performance |
| Timeline |
| Companhia Energtica |
| Apple Inc |
Companhia Energtica and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Energtica and Apple
The main advantage of trading using opposite Companhia Energtica and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Energtica 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 Companhia Energtica de 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.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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