Correlation Between Apple and ATLANTIC LITHIUM

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

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

Diversification Opportunities for Apple and ATLANTIC LITHIUM

-0.08

Correlation Coefficient

Apple  ATLANTIC LITHIUM

Good diversification

The 3 months correlation between Apple and ATLANTIC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ATLANTIC LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLANTIC LITHIUM 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 ATLANTIC LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLANTIC LITHIUM LTD has no effect on the direction of Apple i.e., Apple and ATLANTIC LITHIUM go up and down completely randomly.

Pair Corralation between Apple and ATLANTIC LITHIUM

Assuming the 90 days trading horizon Apple is expected to generate 3.45 times less return on investment than ATLANTIC LITHIUM. But when comparing it to its historical volatility, Apple Inc is 12.69 times less risky than ATLANTIC LITHIUM. It trades about 0.75 of its potential returns per unit of risk. ATLANTIC LITHIUM LTD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12.00  in ATLANTIC LITHIUM LTD on September 18, 2024 and sell it today you would earn a total of  4.00  from holding ATLANTIC LITHIUM LTD or generate 33.33% return on investment over 90 days.

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

Apple Inc  vs.  ATLANTIC LITHIUM LTD

Apple Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

ATLANTIC LITHIUM LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATLANTIC LITHIUM LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, ATLANTIC LITHIUM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and ATLANTIC LITHIUM

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

The idea behind Apple Inc and ATLANTIC LITHIUM 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 Transaction History module to view history of all your transactions and understand their impact on performance.