Correlation Between Apple and Dexterra

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

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

Diversification Opportunities for Apple and Dexterra

0.72

Correlation Coefficient

Apple  Dexterra

Poor diversification

The 3 months correlation between Apple and Dexterra is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group 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 CDR are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Apple i.e., Apple and Dexterra go up and down completely randomly.

Pair Corralation between Apple and Dexterra

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.81 times more return on investment than Dexterra. However, Apple Inc CDR is 1.23 times less risky than Dexterra. It trades about 0.19 of its potential returns per unit of risk. Dexterra Group is currently generating about 0.15 per unit of risk. If you would invest  3,177  in Apple Inc CDR on September 15, 2024 and sell it today you would earn a total of  456.00  from holding Apple Inc CDR or generate 14.35% return on investment over 90 days.

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

Apple Inc CDR  vs.  Dexterra Group

Apple Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dexterra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Dexterra

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

The idea behind Apple Inc CDR and Dexterra Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.