Correlation Between DAIRY FARM and Apple

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

By analyzing existing cross correlation between DAIRY FARM INTL and Apple Inc, you can compare the effects of market volatilities on DAIRY FARM and Apple 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 DAIRY FARM with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Apple.

Diversification Opportunities for DAIRY FARM and Apple

0.53

Correlation Coefficient

DAIRY FARM  Apple

Very weak diversification

The 3 months correlation between DAIRY and Apple is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and DAIRY FARM 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 DAIRY FARM INTL are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Apple go up and down completely randomly.

Pair Corralation between DAIRY FARM and Apple

Assuming the 90 days trading horizon DAIRY FARM is expected to generate 1.37 times less return on investment than Apple. In addition to that, DAIRY FARM is 1.65 times more volatile than Apple Inc. It trades about 0.12 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.28 per unit of volatility. If you would invest  20,416  in Apple Inc on October 1, 2024 and sell it today you would earn a total of  4,099  from holding Apple Inc or generate 20.08% return on investment over 90 days.

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

DAIRY FARM INTL  vs.  Apple Inc

DAIRY FARM INTL

Risk-Adjusted Performance

9 of 100

OK

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

Apple Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAIRY FARM and Apple

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

The idea behind DAIRY FARM INTL and Apple 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .