Correlation Between AP Moeller and Chocoladefabriken

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

By analyzing existing cross correlation between AP Moeller Maersk AS and Chocoladefabriken Lindt Spruengli, you can compare the effects of market volatilities on AP Moeller and Chocoladefabriken 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 AP Moeller with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Chocoladefabriken.

Diversification Opportunities for AP Moeller and Chocoladefabriken

-0.81

Correlation Coefficient

AP Moeller  Chocoladefabriken

Pay attention - limited upside

The 3 months correlation between 0O76 and Chocoladefabriken is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and AP Moeller 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 AP Moeller Maersk AS are associated (or correlated) with Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of AP Moeller i.e., AP Moeller and Chocoladefabriken go up and down completely randomly.

Pair Corralation between AP Moeller and Chocoladefabriken

Assuming the 90 days trading horizon AP Moeller Maersk AS is expected to generate 2.89 times more return on investment than Chocoladefabriken. However, AP Moeller is 2.89 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about 0.14 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about -0.14 per unit of risk. If you would invest  970,500  in AP Moeller Maersk AS on October 5, 2024 and sell it today you would earn a total of  197,500  from holding AP Moeller Maersk AS or generate 20.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

AP Moeller Maersk AS  vs.  Chocoladefabriken Lindt Spruen

AP Moeller Maersk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AP Moeller unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AP Moeller and Chocoladefabriken

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

The idea behind AP Moeller Maersk AS and Chocoladefabriken Lindt Spruengli 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.