Correlation Between Apple and Highland Copper

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

Diversification Opportunities for Apple and Highland Copper

-0.32

Correlation Coefficient

Apple  Highland Copper

Very good diversification

The 3 months correlation between Apple and Highland is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Highland Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Copper 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 Highland Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Copper has no effect on the direction of Apple i.e., Apple and Highland Copper go up and down completely randomly.

Pair Corralation between Apple and Highland Copper

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.2 times more return on investment than Highland Copper. However, Apple Inc CDR is 5.04 times less risky than Highland Copper. It trades about 0.5 of its potential returns per unit of risk. Highland Copper is currently generating about -0.3 per unit of risk. If you would invest  3,412  in Apple Inc CDR on September 24, 2024 and sell it today you would earn a total of  326.00  from holding Apple Inc CDR or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Apple Inc CDR  vs.  Highland Copper

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 abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Highland Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Apple and Highland Copper

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

The idea behind Apple Inc CDR and Highland Copper 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.