Correlation Between Apple and Plantify Foods

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

Diversification Opportunities for Apple and Plantify Foods

-0.83

Correlation Coefficient

Apple  Plantify Foods

Pay attention - limited upside

The 3 months correlation between Apple and Plantify is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Plantify Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plantify Foods 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 Plantify Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plantify Foods has no effect on the direction of Apple i.e., Apple and Plantify Foods go up and down completely randomly.

Pair Corralation between Apple and Plantify Foods

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.16 times more return on investment than Plantify Foods. However, Apple Inc CDR is 6.29 times less risky than Plantify Foods. It trades about 0.19 of its potential returns per unit of risk. Plantify Foods is currently generating about -0.26 per unit of risk. If you would invest  3,177  in Apple Inc CDR on September 16, 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 Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Plantify Foods

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.

Plantify Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plantify Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Apple and Plantify Foods

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

The idea behind Apple Inc CDR and Plantify Foods 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.