Correlation Between High Liner and Apple

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Can any of the company-specific risk be diversified away by investing in both High Liner 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 High Liner and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Apple Inc CDR, you can compare the effects of market volatilities on High Liner 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 High Liner with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Apple.

Diversification Opportunities for High Liner and Apple

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between High and Apple is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods 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 High Liner 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 High Liner Foods 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 High Liner i.e., High Liner and Apple go up and down completely randomly.

Pair Corralation between High Liner and Apple

Assuming the 90 days trading horizon High Liner Foods is expected to generate 1.46 times more return on investment than Apple. However, High Liner is 1.46 times more volatile than Apple Inc CDR. It trades about 0.32 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.21 per unit of risk. If you would invest  1,327  in High Liner Foods on October 7, 2024 and sell it today you would earn a total of  281.00  from holding High Liner Foods or generate 21.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

High Liner Foods  vs.  Apple Inc CDR

 Performance 
       Timeline  
High Liner Foods 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.
Apple Inc CDR 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

High Liner and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with High Liner and Apple

The main advantage of trading using opposite High Liner and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner 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 High Liner Foods 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.
Check out your portfolio center.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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