Correlation Between ZIM Integrated and AP Møller

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

By analyzing existing cross correlation between ZIM Integrated Shipping and AP Mller , you can compare the effects of market volatilities on ZIM Integrated and AP Møller 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 ZIM Integrated with a short position of AP Møller. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIM Integrated and AP Møller.

Diversification Opportunities for ZIM Integrated and AP Møller

0.65

Correlation Coefficient

ZIM Integrated  AP Møller

Poor diversification

The 3 months correlation between ZIM and DP4B is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ZIM Integrated Shipping and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller and ZIM Integrated 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 ZIM Integrated Shipping are associated (or correlated) with AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of ZIM Integrated i.e., ZIM Integrated and AP Møller go up and down completely randomly.

Pair Corralation between ZIM Integrated and AP Møller

Assuming the 90 days horizon ZIM Integrated Shipping is expected to under-perform the AP Møller. In addition to that, ZIM Integrated is 1.53 times more volatile than AP Mller . It trades about -0.13 of its total potential returns per unit of risk. AP Mller is currently generating about -0.1 per unit of volatility. If you would invest  163,350  in AP Mller on September 22, 2024 and sell it today you would lose (8,900) from holding AP Mller or give up 5.45% of portfolio value over 90 days.

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

ZIM Integrated Shipping  vs.  AP Mller

ZIM Integrated Shipping

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ZIM Integrated reported solid returns over the last few months and may actually be approaching a breakup point.

AP Møller

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AP Møller may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ZIM Integrated and AP Møller

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

The idea behind ZIM Integrated Shipping and AP Mller 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.