Correlation Between CHINA WATER and Apple

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

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

Diversification Opportunities for CHINA WATER and Apple

0.16

Correlation Coefficient

CHINA WATER  Apple

Average diversification

The 3 months correlation between CHINA and Apple is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CHINA WATER IGR and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CHINA WATER 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 CHINA WATER IGR 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 has no effect on the direction of CHINA WATER i.e., CHINA WATER and Apple go up and down completely randomly.

Pair Corralation between CHINA WATER and Apple

Assuming the 90 days trading horizon CHINA WATER IGR is expected to under-perform the Apple. In addition to that, CHINA WATER is 7.25 times more volatile than Apple Inc. It trades about -0.13 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.07 per unit of volatility. If you would invest  19,878  in Apple Inc on December 5, 2024 and sell it today you would earn a total of  2,497  from holding Apple Inc or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.8%
Values	Daily Returns

CHINA WATER IGR  vs.  Apple Inc

CHINA WATER IGR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHINA WATER IGR 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. In spite of comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CHINA WATER and Apple

The main advantage of trading using opposite CHINA WATER and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA WATER 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 CHINA WATER IGR and Apple Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.