Correlation Between Apple and CLEANTECH LITH

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

By analyzing existing cross correlation between Apple Inc and CLEANTECH LITH LS, you can compare the effects of market volatilities on Apple and CLEANTECH LITH 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 CLEANTECH LITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CLEANTECH LITH.

Diversification Opportunities for Apple and CLEANTECH LITH

-0.66

Correlation Coefficient

Apple  CLEANTECH LITH

Excellent diversification

The 3 months correlation between Apple and CLEANTECH is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CLEANTECH LITH LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEANTECH LITH LS 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 CLEANTECH LITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEANTECH LITH LS has no effect on the direction of Apple i.e., Apple and CLEANTECH LITH go up and down completely randomly.

Pair Corralation between Apple and CLEANTECH LITH

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.25 times more return on investment than CLEANTECH LITH. However, Apple Inc is 4.08 times less risky than CLEANTECH LITH. It trades about 0.53 of its potential returns per unit of risk. CLEANTECH LITH LS is currently generating about 0.08 per unit of risk. If you would invest  21,650  in Apple Inc on September 19, 2024 and sell it today you would earn a total of  2,395  from holding Apple Inc or generate 11.06% return on investment over 90 days.

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

Apple Inc  vs.  CLEANTECH LITH LS

Apple Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

CLEANTECH LITH LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLEANTECH LITH LS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apple and CLEANTECH LITH

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

The idea behind Apple Inc and CLEANTECH LITH LS 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.