Correlation Between Tearlach Resources and Apple

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

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

Diversification Opportunities for Tearlach Resources and Apple

0.21

Correlation Coefficient

Tearlach Resources  Apple

Modest diversification

The 3 months correlation between Tearlach and Apple is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tearlach Resources Limited and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Tearlach Resources 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 Tearlach Resources Limited 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 has no effect on the direction of Tearlach Resources i.e., Tearlach Resources and Apple go up and down completely randomly.

Pair Corralation between Tearlach Resources and Apple

Assuming the 90 days horizon Tearlach Resources Limited is expected to generate 14.54 times more return on investment than Apple. However, Tearlach Resources is 14.54 times more volatile than Apple Inc. It trades about 0.12 of its potential returns per unit of risk. Apple Inc is currently generating about 0.09 per unit of risk. If you would invest  1.12  in Tearlach Resources Limited on September 3, 2024 and sell it today you would earn a total of  0.70  from holding Tearlach Resources Limited or generate 62.5% return on investment over 90 days.

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

Tearlach Resources Limited  vs.  Apple Inc

Tearlach Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tearlach Resources Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical indicators, Tearlach Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tearlach Resources and Apple

The main advantage of trading using opposite Tearlach Resources and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tearlach Resources 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 Tearlach Resources Limited and Apple Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.