Correlation Between Apple and Faraday Copper

Can any of the company-specific risk be diversified away by investing in both Apple and Faraday Copper 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 Faraday Copper 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 Faraday Copper Corp, you can compare the effects of market volatilities on Apple and Faraday Copper 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 Faraday Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Faraday Copper.

Diversification Opportunities for Apple and Faraday Copper

-0.72

Correlation Coefficient

Apple  Faraday Copper

Pay attention - limited upside

The 3 months correlation between Apple and Faraday is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Faraday Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Copper 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 CDR are associated (or correlated) with Faraday Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Copper Corp has no effect on the direction of Apple i.e., Apple and Faraday Copper go up and down completely randomly.

Pair Corralation between Apple and Faraday Copper

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.56 times more return on investment than Faraday Copper. However, Apple Inc CDR is 1.78 times less risky than Faraday Copper. It trades about 0.12 of its potential returns per unit of risk. Faraday Copper Corp is currently generating about 0.0 per unit of risk. If you would invest  3,082  in Apple Inc CDR on September 23, 2024 and sell it today you would earn a total of  649.00  from holding Apple Inc CDR or generate 21.06% 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.  Faraday Copper Corp

Apple Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Faraday Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Faraday Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Faraday Copper is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Apple and Faraday Copper

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

The idea behind Apple Inc CDR and Faraday Copper Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.