Correlation Between Apple and PENINSULA ENERG

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

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

Diversification Opportunities for Apple and PENINSULA ENERG

-0.79

Correlation Coefficient

Apple  PENINSULA ENERG

Pay attention - limited upside

The 3 months correlation between Apple and PENINSULA is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PENINSULA ENERG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENINSULA ENERG 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 PENINSULA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENINSULA ENERG has no effect on the direction of Apple i.e., Apple and PENINSULA ENERG go up and down completely randomly.

Pair Corralation between Apple and PENINSULA ENERG

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.18 times more return on investment than PENINSULA ENERG. However, Apple Inc is 5.57 times less risky than PENINSULA ENERG. It trades about 0.21 of its potential returns per unit of risk. PENINSULA ENERG is currently generating about -0.07 per unit of risk. If you would invest  20,415  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  3,700  from holding Apple Inc or generate 18.12% 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.  PENINSULA ENERG

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG 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 primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Apple and PENINSULA ENERG

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

The idea behind Apple Inc and PENINSULA ENERG 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.