Correlation Between Apple and Peak Resources

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

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

Diversification Opportunities for Apple and Peak Resources

0.7

Correlation Coefficient

Apple  Peak Resources

Poor diversification

The 3 months correlation between Apple and Peak is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources 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 Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of Apple i.e., Apple and Peak Resources go up and down completely randomly.

Pair Corralation between Apple and Peak Resources

Given the investment horizon of 90 days Apple Inc is expected to generate 0.2 times more return on investment than Peak Resources. However, Apple Inc is 4.96 times less risky than Peak Resources. It trades about 0.0 of its potential returns per unit of risk. Peak Resources Limited is currently generating about -0.02 per unit of risk. If you would invest  23,933  in Apple Inc on December 1, 2024 and sell it today you would lose (203.00) from holding Apple Inc or give up 0.85% of portfolio value over 90 days.

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

Apple Inc  vs.  Peak Resources Limited

Apple Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Peak Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peak Resources Limited 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 stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Apple and Peak Resources

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

The idea behind Apple Inc and Peak Resources Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..