Correlation Between AP Moeller and National Atomic

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

Diversification Opportunities for AP Moeller and National Atomic

-0.43

Correlation Coefficient

AP Moeller  National Atomic

Very good diversification

The 3 months correlation between 0O76 and National is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and National Atomic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Atomic 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 National Atomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Atomic has no effect on the direction of AP Moeller i.e., AP Moeller and National Atomic go up and down completely randomly.

Pair Corralation between AP Moeller and National Atomic

Assuming the 90 days trading horizon AP Moeller Maersk AS is expected to generate 1.32 times more return on investment than National Atomic. However, AP Moeller is 1.32 times more volatile than National Atomic Co. It trades about 0.09 of its potential returns per unit of risk. National Atomic Co is currently generating about -0.03 per unit of risk. If you would invest  1,037,109  in AP Moeller Maersk AS on December 24, 2024 and sell it today you would earn a total of  122,891  from holding AP Moeller Maersk AS or generate 11.85% return on investment over 90 days.

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

AP Moeller Maersk AS  vs.  National Atomic Co

AP Moeller Maersk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AP Moeller unveiled solid returns over the last few months and may actually be approaching a breakup point.

National Atomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Atomic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, National Atomic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AP Moeller and National Atomic

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

The idea behind AP Moeller Maersk AS and National Atomic Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..