Correlation Between Pacific Imperial and Apple

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

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

Diversification Opportunities for Pacific Imperial and Apple

0.14

Correlation Coefficient

Pacific Imperial  Apple

Average diversification

The 3 months correlation between Pacific and Apple is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Imperial Mines 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 Pacific Imperial 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 Pacific Imperial Mines 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 Pacific Imperial i.e., Pacific Imperial and Apple go up and down completely randomly.

Pair Corralation between Pacific Imperial and Apple

Assuming the 90 days horizon Pacific Imperial Mines is expected to generate 11.15 times more return on investment than Apple. However, Pacific Imperial is 11.15 times more volatile than Apple Inc CDR. It trades about 0.13 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.15 per unit of risk. If you would invest  0.50  in Pacific Imperial Mines on December 24, 2024 and sell it today you would earn a total of  0.50  from holding Pacific Imperial Mines or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Pacific Imperial Mines  vs.  Apple Inc CDR

Pacific Imperial Mines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Imperial Mines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pacific Imperial showed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pacific Imperial and Apple

The main advantage of trading using opposite Pacific Imperial and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Imperial 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 Pacific Imperial Mines 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .