Correlation Between Apple and Premium Income

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

Diversification Opportunities for Apple and Premium Income

-0.46

Correlation Coefficient

Apple  Premium Income

Very good diversification

The 3 months correlation between Apple and Premium is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Income 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 Premium Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Income has no effect on the direction of Apple i.e., Apple and Premium Income go up and down completely randomly.

Pair Corralation between Apple and Premium Income

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 1.48 times more return on investment than Premium Income. However, Apple is 1.48 times more volatile than Premium Income. It trades about 0.02 of its potential returns per unit of risk. Premium Income is currently generating about -0.24 per unit of risk. If you would invest  3,555  in Apple Inc CDR on October 4, 2024 and sell it today you would earn a total of  14.00  from holding Apple Inc CDR or generate 0.39% return on investment over 90 days.

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

Apple Inc CDR  vs.  Premium Income

Apple Inc CDR

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and Premium Income

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

The idea behind Apple Inc CDR and Premium Income 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.