Correlation Between Electra Battery and Apple

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

By analyzing existing cross correlation between Electra Battery Materials and Apple Inc CDR, you can compare the effects of market volatilities on Electra Battery and Apple 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 Electra Battery with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Apple.

Diversification Opportunities for Electra Battery and Apple

-0.77

Correlation Coefficient

Electra Battery  Apple

Pay attention - limited upside

The 3 months correlation between Electra and Apple is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Electra Battery 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 Electra Battery Materials are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Electra Battery i.e., Electra Battery and Apple go up and down completely randomly.

Pair Corralation between Electra Battery and Apple

Assuming the 90 days trading horizon Electra Battery is expected to generate 1.5 times less return on investment than Apple. In addition to that, Electra Battery is 3.74 times more volatile than Apple Inc CDR. It trades about 0.01 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.08 per unit of volatility. If you would invest  2,811  in Apple Inc CDR on September 21, 2024 and sell it today you would earn a total of  846.00  from holding Apple Inc CDR or generate 30.1% return on investment over 90 days.

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

Electra Battery Materials  vs.  Apple Inc CDR

Electra Battery Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electra Battery Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Apple Inc CDR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Electra Battery and Apple

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

The idea behind Electra Battery Materials and Apple Inc CDR 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.