Correlation Between Apple and WOOLWORTHS (WWRSG)

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

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

Diversification Opportunities for Apple and WOOLWORTHS (WWRSG)

0.83

Correlation Coefficient

Apple  WOOLWORTHS (WWRSG)

Very poor diversification

The 3 months correlation between Apple and WOOLWORTHS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and WOOLWORTHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOLWORTHS (WWRSG) 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 WOOLWORTHS (WWRSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOLWORTHS (WWRSG) has no effect on the direction of Apple i.e., Apple and WOOLWORTHS (WWRSG) go up and down completely randomly.

Pair Corralation between Apple and WOOLWORTHS (WWRSG)

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the WOOLWORTHS (WWRSG). In addition to that, Apple is 1.39 times more volatile than WOOLWORTHS. It trades about -0.17 of its total potential returns per unit of risk. WOOLWORTHS is currently generating about -0.03 per unit of volatility. If you would invest  1,777  in WOOLWORTHS on December 23, 2024 and sell it today you would lose (47.00) from holding WOOLWORTHS or give up 2.64% of portfolio value over 90 days.

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

Apple Inc  vs.  WOOLWORTHS

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. Despite fragile performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

WOOLWORTHS (WWRSG)

Risk-Adjusted Performance

Very Weak

Over the last 90 days WOOLWORTHS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WOOLWORTHS (WWRSG) 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 WOOLWORTHS (WWRSG)

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

The idea behind Apple Inc and WOOLWORTHS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.