Correlation Between Apple and Wishpond Technologies

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

Diversification Opportunities for Apple and Wishpond Technologies

-0.13

Correlation Coefficient

Apple  Wishpond Technologies

Good diversification

The 3 months correlation between Apple and Wishpond is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Wishpond Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wishpond Technologies 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 Wishpond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wishpond Technologies has no effect on the direction of Apple i.e., Apple and Wishpond Technologies go up and down completely randomly.

Pair Corralation between Apple and Wishpond Technologies

Assuming the 90 days trading horizon Apple is expected to generate 4.43 times less return on investment than Wishpond Technologies. But when comparing it to its historical volatility, Apple Inc CDR is 2.62 times less risky than Wishpond Technologies. It trades about 0.06 of its potential returns per unit of risk. Wishpond Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Wishpond Technologies on November 20, 2024 and sell it today you would earn a total of  6.00  from holding Wishpond Technologies or generate 23.08% 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.  Wishpond Technologies

Apple Inc CDR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Wishpond Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wishpond Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Wishpond Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Wishpond Technologies

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

The idea behind Apple Inc CDR and Wishpond Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.