Correlation Between Apple and Hemisphere Energy

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

Diversification Opportunities for Apple and Hemisphere Energy

0.62

Correlation Coefficient

Apple  Hemisphere Energy

Poor diversification

The 3 months correlation between Apple and Hemisphere is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of Apple i.e., Apple and Hemisphere Energy go up and down completely randomly.

Pair Corralation between Apple and Hemisphere Energy

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.79 times more return on investment than Hemisphere Energy. However, Apple Inc is 1.26 times less risky than Hemisphere Energy. It trades about 0.09 of its potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.05 per unit of risk. If you would invest  20,675  in Apple Inc on September 2, 2024 and sell it today you would earn a total of  1,775  from holding Apple Inc or generate 8.59% return on investment over 90 days.

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

Apple Inc  vs.  Hemisphere Energy Corp

Apple Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hemisphere Energy Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hemisphere Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and Hemisphere Energy

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

The idea behind Apple Inc and Hemisphere Energy Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.