Correlation Between Hot Mamas and Apple

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

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

Diversification Opportunities for Hot Mamas and Apple

0.0

Correlation Coefficient

Hot Mamas  Apple

Pay attention - limited upside

The 3 months correlation between Hot and Apple is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hot Mamas Foods and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Hot Mamas 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 Hot Mamas Foods 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 Hot Mamas i.e., Hot Mamas and Apple go up and down completely randomly.

Pair Corralation between Hot Mamas and Apple

If you would invest (100.00) in Hot Mamas Foods on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Hot Mamas Foods or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hot Mamas Foods  vs.  Apple Inc

Hot Mamas Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hot Mamas Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hot Mamas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Hot Mamas and Apple

The main advantage of trading using opposite Hot Mamas and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hot Mamas 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 Hot Mamas Foods 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.