Correlation Between Neptune Digital and Apple

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

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

Diversification Opportunities for Neptune Digital and Apple

0.42

Correlation Coefficient

Neptune Digital  Apple

Very weak diversification

The 3 months correlation between Neptune and Apple is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Neptune Digital Assets 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 Neptune Digital 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 Neptune Digital Assets 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 Neptune Digital i.e., Neptune Digital and Apple go up and down completely randomly.

Pair Corralation between Neptune Digital and Apple

Assuming the 90 days horizon Neptune Digital Assets is expected to generate 12.73 times more return on investment than Apple. However, Neptune Digital is 12.73 times more volatile than Apple Inc CDR. It trades about 0.21 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.14 per unit of risk. If you would invest  25.00  in Neptune Digital Assets on September 12, 2024 and sell it today you would earn a total of  85.00  from holding Neptune Digital Assets or generate 340.0% return on investment over 90 days.

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

Neptune Digital Assets  vs.  Apple Inc CDR

Neptune Digital Assets

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Neptune Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Neptune Digital and Apple

The main advantage of trading using opposite Neptune Digital and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neptune Digital 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 Neptune Digital Assets 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.