Correlation Between Apple and South Pacific
Can any of the company-specific risk be diversified away by investing in both Apple and South Pacific 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 South Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and South Pacific Metals, you can compare the effects of market volatilities on Apple and South Pacific 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 South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and South Pacific.
Diversification Opportunities for Apple and South Pacific
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Apple and South is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals 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 CDR are associated (or correlated) with South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Apple i.e., Apple and South Pacific go up and down completely randomly.
Pair Corralation between Apple and South Pacific
Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the South Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc CDR is 1.67 times less risky than South Pacific. The stock trades about -0.45 of its potential returns per unit of risk. The South Pacific Metals is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 45.00 in South Pacific Metals on October 25, 2024 and sell it today you would earn a total of 12.00 from holding South Pacific Metals or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. South Pacific Metals
Performance |
| Timeline |
| Apple Inc CDR |
| South Pacific Metals |
Apple and South Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and South Pacific
The main advantage of trading using opposite Apple and South Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, South Pacific 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 South Pacific will offset losses from the drop in South Pacific's long position.| Apple vs. Caribbean Utilities | Apple vs. CNJ Capital Investments | Apple vs. Datable Technology Corp | Apple vs. Algonquin Power Utilities |
| South Pacific vs. Brookfield Investments | South Pacific vs. Bausch Health Companies | South Pacific vs. Nova Leap Health | South Pacific vs. Nano One Materials |
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 the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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