Correlation Between AP Moeller and MOL Hungarian

Can any of the company-specific risk be diversified away by investing in both AP Moeller and MOL Hungarian 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 MOL Hungarian 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 MOL Hungarian Oil, you can compare the effects of market volatilities on AP Moeller and MOL Hungarian 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 MOL Hungarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and MOL Hungarian.

Diversification Opportunities for AP Moeller and MOL Hungarian

0.02

Correlation Coefficient

AP Moeller  MOL Hungarian

Significant diversification

The 3 months correlation between 0O76 and MOL is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and MOL Hungarian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Hungarian Oil 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 MOL Hungarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Hungarian Oil has no effect on the direction of AP Moeller i.e., AP Moeller and MOL Hungarian go up and down completely randomly.

Pair Corralation between AP Moeller and MOL Hungarian

Assuming the 90 days trading horizon AP Moeller Maersk AS is expected to generate 0.88 times more return on investment than MOL Hungarian. However, AP Moeller Maersk AS is 1.13 times less risky than MOL Hungarian. It trades about 0.14 of its potential returns per unit of risk. MOL Hungarian Oil is currently generating about 0.01 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AP Moeller Maersk AS  vs.  MOL Hungarian Oil

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.

MOL Hungarian Oil

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOL Hungarian Oil are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MOL Hungarian is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AP Moeller and MOL Hungarian

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

The idea behind AP Moeller Maersk AS and MOL Hungarian Oil 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.