Correlation Between Apple and LEEF BRANDS

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

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

Diversification Opportunities for Apple and LEEF BRANDS

0.67

Correlation Coefficient

Apple  LEEF BRANDS

Poor diversification

The 3 months correlation between Apple and LEEF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and LEEF BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEEF BRANDS INC 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 LEEF BRANDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEEF BRANDS INC has no effect on the direction of Apple i.e., Apple and LEEF BRANDS go up and down completely randomly.

Pair Corralation between Apple and LEEF BRANDS

Assuming the 90 days trading horizon Apple is expected to generate 45.68 times less return on investment than LEEF BRANDS. But when comparing it to its historical volatility, Apple Inc is 103.26 times less risky than LEEF BRANDS. It trades about 0.58 of its potential returns per unit of risk. LEEF BRANDS INC is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3.00  in LEEF BRANDS INC on September 17, 2024 and sell it today you would earn a total of  14.00  from holding LEEF BRANDS INC or generate 466.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Apple Inc  vs.  LEEF BRANDS INC

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

LEEF BRANDS INC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LEEF BRANDS INC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LEEF BRANDS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and LEEF BRANDS

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

The idea behind Apple Inc and LEEF BRANDS INC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.