Correlation Between Globex Mining and Apple

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

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

Diversification Opportunities for Globex Mining and Apple

0.76

Correlation Coefficient

Globex Mining  Apple

Poor diversification

The 3 months correlation between Globex and Apple is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises 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 Globex Mining 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and Apple go up and down completely randomly.

Pair Corralation between Globex Mining and Apple

Assuming the 90 days trading horizon Globex Mining is expected to generate 1.18 times less return on investment than Apple. In addition to that, Globex Mining is 1.65 times more volatile than Apple Inc CDR. It trades about 0.06 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.12 per unit of volatility. If you would invest  2,607  in Apple Inc CDR on October 9, 2024 and sell it today you would earn a total of  937.00  from holding Apple Inc CDR or generate 35.94% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Apple Inc CDR

Globex Mining Enterprises

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Globex Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Globex Mining and Apple

The main advantage of trading using opposite Globex Mining and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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 Globex Mining Enterprises 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.