Correlation Between Apple and Cofina SGPS

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

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

Diversification Opportunities for Apple and Cofina SGPS

0.8

Correlation Coefficient

Apple  Cofina SGPS

Very poor diversification

The 3 months correlation between Apple and Cofina is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Cofina SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cofina SGPS 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 are associated (or correlated) with Cofina SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cofina SGPS SA has no effect on the direction of Apple i.e., Apple and Cofina SGPS go up and down completely randomly.

Pair Corralation between Apple and Cofina SGPS

Assuming the 90 days trading horizon Apple is expected to generate 1.1 times less return on investment than Cofina SGPS. But when comparing it to its historical volatility, Apple Inc is 2.17 times less risky than Cofina SGPS. It trades about 0.25 of its potential returns per unit of risk. Cofina SGPS SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,580  in Cofina SGPS SA on September 29, 2024 and sell it today you would earn a total of  480.00  from holding Cofina SGPS SA or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Apple Inc  vs.  Cofina SGPS SA

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Cofina SGPS SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cofina SGPS SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cofina SGPS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Cofina SGPS

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

The idea behind Apple Inc and Cofina SGPS 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.