Correlation Between Apple and Winsome Resources

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

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

Diversification Opportunities for Apple and Winsome Resources

-0.29

Correlation Coefficient

Apple  Winsome Resources

Very good diversification

The 3 months correlation between Apple and Winsome is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Winsome Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winsome Resources and Apple 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 Apple Inc are associated (or correlated) with Winsome Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winsome Resources has no effect on the direction of Apple i.e., Apple and Winsome Resources go up and down completely randomly.

Pair Corralation between Apple and Winsome Resources

Given the investment horizon of 90 days Apple Inc is expected to generate 0.17 times more return on investment than Winsome Resources. However, Apple Inc is 5.77 times less risky than Winsome Resources. It trades about 0.12 of its potential returns per unit of risk. Winsome Resources Limited is currently generating about 0.0 per unit of risk. If you would invest  22,214  in Apple Inc on September 5, 2024 and sell it today you would earn a total of  2,087  from holding Apple Inc or generate 9.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Winsome Resources Limited

Apple Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 9 (%) 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.

Winsome Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apple and Winsome Resources

The main advantage of trading using opposite Apple and Winsome Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Winsome Resources 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 Winsome Resources will offset losses from the drop in Winsome Resources' long position.

The idea behind Apple Inc and Winsome Resources Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.