Correlation Between Apple and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both Apple and Hemisphere Energy 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 Hemisphere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Hemisphere Energy Corp, you can compare the effects of market volatilities on Apple and Hemisphere Energy 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 Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Hemisphere Energy.
Diversification Opportunities for Apple and Hemisphere Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Hemisphere is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of Apple i.e., Apple and Hemisphere Energy go up and down completely randomly.
Pair Corralation between Apple and Hemisphere Energy
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.85 times more return on investment than Hemisphere Energy. However, Apple Inc is 1.18 times less risky than Hemisphere Energy. It trades about 0.17 of its potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.03 per unit of risk. If you would invest 20,331 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 2,079 from holding Apple Inc or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Hemisphere Energy Corp
Performance |
| Timeline |
| Apple Inc |
| Hemisphere Energy Corp |
Apple and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Hemisphere Energy
The main advantage of trading using opposite Apple and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Hemisphere Energy 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy's long position.| Apple vs. Treasury Wine Estates | Apple vs. Daito Trust Construction | Apple vs. Granite Construction | Apple vs. TITAN MACHINERY |
| Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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