Correlation Between Rocky Mountain and Apple

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

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

Diversification Opportunities for Rocky Mountain and Apple

-0.86

Correlation Coefficient

Rocky Mountain  Apple

Pay attention - limited upside

The 3 months correlation between Rocky and Apple is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor 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 Rocky Mountain 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 Rocky Mountain Liquor 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 Rocky Mountain i.e., Rocky Mountain and Apple go up and down completely randomly.

Pair Corralation between Rocky Mountain and Apple

Assuming the 90 days horizon Rocky Mountain Liquor is expected to under-perform the Apple. In addition to that, Rocky Mountain is 6.3 times more volatile than Apple Inc CDR. It trades about -0.14 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.5 per unit of volatility. If you would invest  3,412  in Apple Inc CDR on September 24, 2024 and sell it today you would earn a total of  326.00  from holding Apple Inc CDR or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Rocky Mountain Liquor  vs.  Apple Inc CDR

Rocky Mountain Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Mountain Liquor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Apple Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 12 (%) 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 Rocky Mountain and Apple

The main advantage of trading using opposite Rocky Mountain and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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 Rocky Mountain Liquor 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 CEOs Directory module to screen CEOs from public companies around the world.