Correlation Between Apple and Atomic Minerals

Can any of the company-specific risk be diversified away by investing in both Apple and Atomic Minerals 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 Atomic Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Atomic Minerals, you can compare the effects of market volatilities on Apple and Atomic Minerals 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 Atomic Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Atomic Minerals.

Diversification Opportunities for Apple and Atomic Minerals

-0.13

Correlation Coefficient

Apple  Atomic Minerals

Good diversification

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

Pair Corralation between Apple and Atomic Minerals

Given the investment horizon of 90 days Apple is expected to generate 5.33 times less return on investment than Atomic Minerals. But when comparing it to its historical volatility, Apple Inc is 10.58 times less risky than Atomic Minerals. It trades about 0.19 of its potential returns per unit of risk. Atomic Minerals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.80  in Atomic Minerals on September 14, 2024 and sell it today you would earn a total of  1.20  from holding Atomic Minerals or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Apple Inc  vs.  Atomic Minerals

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Apple disclosed solid returns over the last few months and may actually be approaching a breakup point.

Atomic Minerals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atomic Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Atomic Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Atomic Minerals

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

The idea behind Apple Inc and Atomic Minerals 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.