Correlation Between Andean Precious and Apple

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

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

Diversification Opportunities for Andean Precious and Apple

0.32

Correlation Coefficient

Andean Precious  Apple

Weak diversification

The 3 months correlation between Andean and Apple is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Andean Precious Metals 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 Andean Precious 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 Andean Precious Metals 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 Andean Precious i.e., Andean Precious and Apple go up and down completely randomly.

Pair Corralation between Andean Precious and Apple

Assuming the 90 days horizon Andean Precious Metals is expected to generate 2.93 times more return on investment than Apple. However, Andean Precious is 2.93 times more volatile than Apple Inc CDR. It trades about 0.06 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.06 per unit of risk. If you would invest  78.00  in Andean Precious Metals on July 13, 2024 and sell it today you would earn a total of  90.00  from holding Andean Precious Metals or generate 115.38% return on investment over 90 days.

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

Andean Precious Metals  vs.  Apple Inc CDR

Andean Precious Metals

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Andean Precious Metals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Andean Precious showed solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Andean Precious and Apple

The main advantage of trading using opposite Andean Precious and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andean Precious 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 Andean Precious Metals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.