Correlation Between SIMS METAL and Apple

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

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

Diversification Opportunities for SIMS METAL and Apple

0.19

Correlation Coefficient

SIMS METAL  Apple

Average diversification

The 3 months correlation between SIMS and Apple is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and SIMS METAL 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 SIMS METAL MGT 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 SIMS METAL i.e., SIMS METAL and Apple go up and down completely randomly.

Pair Corralation between SIMS METAL and Apple

Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 1.97 times more return on investment than Apple. However, SIMS METAL is 1.97 times more volatile than Apple Inc. It trades about 0.15 of its potential returns per unit of risk. Apple Inc is currently generating about 0.27 per unit of risk. If you would invest  637.00  in SIMS METAL MGT on September 14, 2024 and sell it today you would earn a total of  148.00  from holding SIMS METAL MGT or generate 23.23% return on investment over 90 days.

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

SIMS METAL MGT  vs.  Apple Inc

SIMS METAL MGT

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, SIMS METAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMS METAL and Apple

The main advantage of trading using opposite SIMS METAL and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL 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 SIMS METAL MGT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.