Correlation Between Apple and Great Atlantic

Can any of the company-specific risk be diversified away by investing in both Apple and Great Atlantic 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 Great Atlantic 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 Great Atlantic Resources, you can compare the effects of market volatilities on Apple and Great Atlantic 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 Great Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Great Atlantic.

Diversification Opportunities for Apple and Great Atlantic

-0.5

Correlation Coefficient

Apple  Great Atlantic

Very good diversification

The 3 months correlation between Apple and Great is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Great Atlantic Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Atlantic Resources 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 Great Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Atlantic Resources has no effect on the direction of Apple i.e., Apple and Great Atlantic go up and down completely randomly.

Pair Corralation between Apple and Great Atlantic

Assuming the 90 days trading horizon Apple is expected to generate 3.56 times less return on investment than Great Atlantic. But when comparing it to its historical volatility, Apple Inc CDR is 7.8 times less risky than Great Atlantic. It trades about 0.11 of its potential returns per unit of risk. Great Atlantic Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Great Atlantic Resources on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Great Atlantic Resources or generate 0.0% return on investment over 90 days.

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

Apple Inc CDR  vs.  Great Atlantic Resources

Apple Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Great Atlantic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Atlantic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Great Atlantic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Apple and Great Atlantic

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

The idea behind Apple Inc CDR and Great Atlantic Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.