Correlation Between Apple and Keg Royalties

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

Diversification Opportunities for Apple and Keg Royalties

0.65

Correlation Coefficient

Apple  Keg Royalties

Poor diversification

The 3 months correlation between Apple and Keg is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Apple i.e., Apple and Keg Royalties go up and down completely randomly.

Pair Corralation between Apple and Keg Royalties

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Keg Royalties. In addition to that, Apple is 1.51 times more volatile than The Keg Royalties. It trades about -0.13 of its total potential returns per unit of risk. The Keg Royalties is currently generating about -0.1 per unit of volatility. If you would invest  1,478  in The Keg Royalties on December 30, 2024 and sell it today you would lose (110.00) from holding The Keg Royalties or give up 7.44% of portfolio value over 90 days.

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

Apple Inc CDR  vs.  The Keg Royalties

Apple Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Keg Royalties

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Keg Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Apple and Keg Royalties

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

The idea behind Apple Inc CDR and The Keg Royalties 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.