Correlation Between Pure Energy and Apple

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

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

Diversification Opportunities for Pure Energy and Apple

-0.17

Correlation Coefficient

Pure Energy  Apple

Good diversification

The 3 months correlation between Pure and Apple is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pure Energy Minerals 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 Pure Energy 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 Pure Energy Minerals 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 Pure Energy i.e., Pure Energy and Apple go up and down completely randomly.

Pair Corralation between Pure Energy and Apple

Given the investment horizon of 90 days Pure Energy Minerals is expected to under-perform the Apple. In addition to that, Pure Energy is 5.8 times more volatile than Apple Inc CDR. It trades about -0.01 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.21 per unit of volatility. If you would invest  3,269  in Apple Inc CDR on October 6, 2024 and sell it today you would earn a total of  294.00  from holding Apple Inc CDR or generate 8.99% return on investment over 90 days.

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

Pure Energy Minerals  vs.  Apple Inc CDR

Pure Energy Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pure Energy Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pure Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apple Inc CDR

Risk-Adjusted Performance

10 of 100

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 unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pure Energy and Apple

The main advantage of trading using opposite Pure Energy and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Energy 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 Pure Energy Minerals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.