Correlation Between Apple and Bunge

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Can any of the company-specific risk be diversified away by investing in both Apple and Bunge 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 Bunge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Bunge, you can compare the effects of market volatilities on Apple and Bunge 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 Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Bunge.

Diversification Opportunities for Apple and Bunge

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Apple and Bunge is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Bunge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge 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 Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge has no effect on the direction of Apple i.e., Apple and Bunge go up and down completely randomly.

Pair Corralation between Apple and Bunge

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Bunge. In addition to that, Apple is 1.62 times more volatile than Bunge. It trades about -0.07 of its total potential returns per unit of risk. Bunge is currently generating about 0.17 per unit of volatility. If you would invest  9,615  in Bunge on August 29, 2022 and sell it today you would earn a total of  563.00  from holding Bunge or generate 5.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Bunge

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Bunge 
Bunge Performance
0 of 100
Over the last 90 days Bunge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bunge is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bunge Price Channel

Apple and Bunge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Bunge

The main advantage of trading using opposite Apple and Bunge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Bunge 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 Bunge will offset losses from the drop in Bunge's long position.
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The idea behind Apple Inc and Bunge 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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Check out your portfolio center. 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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