Correlation Between Apple and Central Puerto

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

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

Diversification Opportunities for Apple and Central Puerto

-0.82

Correlation Coefficient

Apple  Central Puerto

Pay attention - limited upside

The 3 months correlation between Apple and Central is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc DRC and Central Puerto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Puerto SA 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 DRC are associated (or correlated) with Central Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Puerto SA has no effect on the direction of Apple i.e., Apple and Central Puerto go up and down completely randomly.

Pair Corralation between Apple and Central Puerto

Assuming the 90 days trading horizon Apple is expected to generate 6.75 times less return on investment than Central Puerto. But when comparing it to its historical volatility, Apple Inc DRC is 2.44 times less risky than Central Puerto. It trades about 0.1 of its potential returns per unit of risk. Central Puerto SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  136,500  in Central Puerto SA on September 12, 2024 and sell it today you would earn a total of  23,000  from holding Central Puerto SA or generate 16.85% return on investment over 90 days.

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

Apple Inc DRC  vs.  Central Puerto SA

Apple Inc DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Apple is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Central Puerto SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Puerto SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Central Puerto sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Central Puerto

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

The idea behind Apple Inc DRC and Central Puerto SA 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.