Correlation Between Apple and INDUSTRIAL MINERALS

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

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

Diversification Opportunities for Apple and INDUSTRIAL MINERALS

-0.79

Correlation Coefficient

Apple  INDUSTRIAL MINERALS

Pay attention - limited upside

The 3 months correlation between Apple and INDUSTRIAL is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and INDUSTRIAL MINERALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MINERALS LTD 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 INDUSTRIAL MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MINERALS LTD has no effect on the direction of Apple i.e., Apple and INDUSTRIAL MINERALS go up and down completely randomly.

Pair Corralation between Apple and INDUSTRIAL MINERALS

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.22 times more return on investment than INDUSTRIAL MINERALS. However, Apple Inc is 4.55 times less risky than INDUSTRIAL MINERALS. It trades about 0.23 of its potential returns per unit of risk. INDUSTRIAL MINERALS LTD is currently generating about -0.06 per unit of risk. If you would invest  20,491  in Apple Inc on October 8, 2024 and sell it today you would earn a total of  3,214  from holding Apple Inc or generate 15.68% return on investment over 90 days.

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

Apple Inc  vs.  INDUSTRIAL MINERALS LTD

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

INDUSTRIAL MINERALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDUSTRIAL MINERALS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Apple and INDUSTRIAL MINERALS

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

The idea behind Apple Inc and INDUSTRIAL MINERALS LTD 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.