Correlation Between Apple and Hampton Financial

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

Diversification Opportunities for Apple and Hampton Financial

-0.05

Correlation Coefficient

Apple  Hampton Financial

Good diversification

The 3 months correlation between Apple and Hampton is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Hampton Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampton Financial 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 Hampton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampton Financial Corp has no effect on the direction of Apple i.e., Apple and Hampton Financial go up and down completely randomly.

Pair Corralation between Apple and Hampton Financial

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.45 times more return on investment than Hampton Financial. However, Apple Inc CDR is 2.22 times less risky than Hampton Financial. It trades about 0.11 of its potential returns per unit of risk. Hampton Financial Corp is currently generating about -0.01 per unit of risk. If you would invest  1,866  in Apple Inc CDR on September 26, 2024 and sell it today you would earn a total of  1,915  from holding Apple Inc CDR or generate 102.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Hampton Financial Corp

Apple Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hampton Financial Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hampton Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hampton Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Apple and Hampton Financial

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

The idea behind Apple Inc CDR and Hampton Financial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.