Correlation Between Apple and INDIKA ENERGY

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

Diversification Opportunities for Apple and INDIKA ENERGY

-0.57

Correlation Coefficient

Apple  INDIKA ENERGY

Excellent diversification

The 3 months correlation between Apple and INDIKA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Apple i.e., Apple and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between Apple and INDIKA ENERGY

Assuming the 90 days trading horizon Apple is expected to generate 20.64 times less return on investment than INDIKA ENERGY. But when comparing it to its historical volatility, Apple Inc is 3.16 times less risky than INDIKA ENERGY. It trades about 0.01 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7.55  in INDIKA ENERGY on December 4, 2024 and sell it today you would earn a total of  1.45  from holding INDIKA ENERGY or generate 19.21% return on investment over 90 days.

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

Apple Inc  vs.  INDIKA ENERGY

Apple Inc

Risk-Adjusted Performance

Very Weak

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

INDIKA ENERGY

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, INDIKA ENERGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and INDIKA ENERGY

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

The idea behind Apple Inc and INDIKA ENERGY 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.