Correlation Between AP Moeller and Panther Metals

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

Diversification Opportunities for AP Moeller and Panther Metals

0.31

Correlation Coefficient

AP Moeller  Panther Metals

Weak diversification

The 3 months correlation between 0O76 and Panther is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Panther Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panther Metals PLC 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 Panther Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panther Metals PLC has no effect on the direction of AP Moeller i.e., AP Moeller and Panther Metals go up and down completely randomly.

Pair Corralation between AP Moeller and Panther Metals

Assuming the 90 days trading horizon AP Moeller is expected to generate 1.17 times less return on investment than Panther Metals. But when comparing it to its historical volatility, AP Moeller Maersk AS is 1.83 times less risky than Panther Metals. It trades about 0.15 of its potential returns per unit of risk. Panther Metals PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,500  in Panther Metals PLC on October 7, 2024 and sell it today you would earn a total of  1,750  from holding Panther Metals PLC or generate 23.33% 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.  Panther Metals PLC

AP Moeller Maersk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AP Moeller unveiled solid returns over the last few months and may actually be approaching a breakup point.

Panther Metals PLC

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with AP Moeller and Panther Metals

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

The idea behind AP Moeller Maersk AS and Panther Metals PLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.