Correlation Between Apple and ROC Energy

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

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

Diversification Opportunities for Apple and ROC Energy

-0.23

Correlation Coefficient

Apple  ROC Energy

Very good diversification

The 3 months correlation between Apple and ROC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ROC Energy Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROC Energy Acquisition 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 ROC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROC Energy Acquisition has no effect on the direction of Apple i.e., Apple and ROC Energy go up and down completely randomly.

Pair Corralation between Apple and ROC Energy

Given the investment horizon of 90 days Apple Inc is expected to generate 0.29 times more return on investment than ROC Energy. However, Apple Inc is 3.43 times less risky than ROC Energy. It trades about 0.08 of its potential returns per unit of risk. ROC Energy Acquisition is currently generating about -0.13 per unit of risk. If you would invest  14,392  in Apple Inc on October 23, 2024 and sell it today you would earn a total of  8,606  from holding Apple Inc or generate 59.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.64%
Values	Daily Returns

Apple Inc  vs.  ROC Energy Acquisition

Apple Inc

Risk-Adjusted Performance

0 of 100

Very 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.

ROC Energy Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROC Energy Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ROC Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apple and ROC Energy

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

The idea behind Apple Inc and ROC Energy Acquisition 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.