Correlation Between Apple and Compania Minera

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

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

Diversification Opportunities for Apple and Compania Minera

-0.34

Correlation Coefficient

Apple  Compania Minera

Very good diversification

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

Pair Corralation between Apple and Compania Minera

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.83 times more return on investment than Compania Minera. However, Apple Inc is 1.2 times less risky than Compania Minera. It trades about 0.09 of its potential returns per unit of risk. Compania Minera Poderosa is currently generating about -0.02 per unit of risk. If you would invest  23,065  in Apple Inc on October 12, 2024 and sell it today you would earn a total of  1,485  from holding Apple Inc or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Apple Inc  vs.  Compania Minera Poderosa

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Compania Minera Poderosa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Minera Poderosa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Compania Minera is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and Compania Minera

The main advantage of trading using opposite Apple and Compania Minera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Compania Minera 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 Compania Minera will offset losses from the drop in Compania Minera's long position.

The idea behind Apple Inc and Compania Minera Poderosa 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..