Correlation Between AP Moeller and Cornish Metals

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

Diversification Opportunities for AP Moeller and Cornish Metals

0.21

Correlation Coefficient

AP Moeller  Cornish Metals

Modest diversification

The 3 months correlation between 0O76 and Cornish is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of AP Moeller i.e., AP Moeller and Cornish Metals go up and down completely randomly.

Pair Corralation between AP Moeller and Cornish Metals

Assuming the 90 days trading horizon AP Moeller Maersk AS is expected to under-perform the Cornish Metals. In addition to that, AP Moeller is 1.16 times more volatile than Cornish Metals. It trades about -0.17 of its total potential returns per unit of risk. Cornish Metals is currently generating about 0.08 per unit of volatility. If you would invest  905.00  in Cornish Metals on October 17, 2024 and sell it today you would earn a total of  23.00  from holding Cornish Metals or generate 2.54% return on investment over 90 days.

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

AP Moeller Maersk AS  vs.  Cornish Metals

AP Moeller Maersk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AP Moeller may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cornish Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Moeller and Cornish Metals

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

The idea behind AP Moeller Maersk AS and Cornish Metals 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.