Correlation Between InPlay Oil and Apple

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

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

Diversification Opportunities for InPlay Oil and Apple

-0.6

Correlation Coefficient

InPlay Oil  Apple

Excellent diversification

The 3 months correlation between InPlay and Apple is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Apple go up and down completely randomly.

Pair Corralation between InPlay Oil and Apple

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Apple. In addition to that, InPlay Oil is 1.48 times more volatile than Apple Inc CDR. It trades about -0.03 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.07 per unit of volatility. If you would invest  2,148  in Apple Inc CDR on October 22, 2024 and sell it today you would earn a total of  1,214  from holding Apple Inc CDR or generate 56.52% return on investment over 90 days.

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

InPlay Oil Corp  vs.  Apple Inc CDR

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. 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 InPlay Oil and Apple

The main advantage of trading using opposite InPlay Oil and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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 InPlay Oil Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.