Correlation Between PETROSEA and Apple

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

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

Diversification Opportunities for PETROSEA and Apple

0.91

Correlation Coefficient

PETROSEA  Apple

Almost no diversification

The 3 months correlation between PETROSEA and Apple is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding PETROSEA and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and PETROSEA 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 PETROSEA 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 PETROSEA i.e., PETROSEA and Apple go up and down completely randomly.

Pair Corralation between PETROSEA and Apple

Assuming the 90 days trading horizon PETROSEA is expected to generate 7.45 times more return on investment than Apple. However, PETROSEA is 7.45 times more volatile than Apple Inc. It trades about 0.49 of its potential returns per unit of risk. Apple Inc is currently generating about 0.8 per unit of risk. If you would invest  109.00  in PETROSEA on September 29, 2024 and sell it today you would earn a total of  56.00  from holding PETROSEA or generate 51.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

PETROSEA  vs.  Apple Inc

PETROSEA

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PETROSEA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PETROSEA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PETROSEA and Apple

The main advantage of trading using opposite PETROSEA and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PETROSEA 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 PETROSEA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.