Correlation Between APPLE and Generation Mining

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

By analyzing existing cross correlation between APPLE INC 3 and Generation Mining Limited, you can compare the effects of market volatilities on APPLE and Generation Mining 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 Generation Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLE and Generation Mining.

Diversification Opportunities for APPLE and Generation Mining

0.15

Correlation Coefficient

APPLE  Generation Mining

Average diversification

The 3 months correlation between APPLE and Generation is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding APPLE INC 3 and Generation Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Mining 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 3 are associated (or correlated) with Generation Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Mining has no effect on the direction of APPLE i.e., APPLE and Generation Mining go up and down completely randomly.

Pair Corralation between APPLE and Generation Mining

Assuming the 90 days trading horizon APPLE is expected to generate 7.34 times less return on investment than Generation Mining. But when comparing it to its historical volatility, APPLE INC 3 is 11.76 times less risky than Generation Mining. It trades about 0.15 of its potential returns per unit of risk. Generation Mining Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Generation Mining Limited on April 4, 2024 and sell it today you would earn a total of  1.00  from holding Generation Mining Limited or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

APPLE INC 3  vs.  Generation Mining Limited

APPLE INC 3

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in APPLE INC 3 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, APPLE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Generation Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Mining Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Generation Mining may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Pair Trading with APPLE and Generation Mining

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

The idea behind APPLE INC 3 and Generation Mining 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.