Correlation Between Apple and Bell Copper

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

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

Diversification Opportunities for Apple and Bell Copper

-0.35

Correlation Coefficient

Apple  Bell Copper

Very good diversification

The 3 months correlation between Apple and Bell is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Bell Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell 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 are associated (or correlated) with Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper has no effect on the direction of Apple i.e., Apple and Bell Copper go up and down completely randomly.

Pair Corralation between Apple and Bell Copper

Given the investment horizon of 90 days Apple is expected to generate 2.05 times less return on investment than Bell Copper. But when comparing it to its historical volatility, Apple Inc is 7.94 times less risky than Bell Copper. It trades about 0.1 of its potential returns per unit of risk. Bell Copper is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Bell Copper on September 19, 2024 and sell it today you would lose (6.50) from holding Bell Copper or give up 72.22% of portfolio value over 90 days.

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

Apple Inc  vs.  Bell Copper

Apple Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bell Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Copper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Bell Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Bell Copper

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

The idea behind Apple Inc and Bell 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.