Correlation Between LEEF BRANDS and Apple

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

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

Diversification Opportunities for LEEF BRANDS and Apple

0.67

Correlation Coefficient

LEEF BRANDS  Apple

Poor diversification

The 3 months correlation between LEEF and Apple is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding LEEF BRANDS INC and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and LEEF BRANDS 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 LEEF BRANDS INC 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 LEEF BRANDS i.e., LEEF BRANDS and Apple go up and down completely randomly.

Pair Corralation between LEEF BRANDS and Apple

Assuming the 90 days horizon LEEF BRANDS INC is expected to generate 82.98 times more return on investment than Apple. However, LEEF BRANDS is 82.98 times more volatile than Apple Inc. It trades about 0.19 of its potential returns per unit of risk. Apple Inc is currently generating about 0.26 per unit of risk. If you would invest  0.50  in LEEF BRANDS INC on September 17, 2024 and sell it today you would earn a total of  16.50  from holding LEEF BRANDS INC or generate 3300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

LEEF BRANDS INC  vs.  Apple Inc

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.

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.

Pair Trading with LEEF BRANDS and Apple

The main advantage of trading using opposite LEEF BRANDS and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEEF BRANDS 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 LEEF BRANDS INC 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.