Correlation Between InPlay Oil and AP Møller

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

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

Diversification Opportunities for InPlay Oil and AP Møller

-0.4

Correlation Coefficient

InPlay Oil  AP Møller

Very good diversification

The 3 months correlation between InPlay and DP4B is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller and InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and AP Møller go up and down completely randomly.

Pair Corralation between InPlay Oil and AP Møller

Assuming the 90 days trading horizon InPlay Oil is expected to generate 2.94 times less return on investment than AP Møller. In addition to that, InPlay Oil is 1.2 times more volatile than AP Mller . It trades about 0.02 of its total potential returns per unit of risk. AP Mller is currently generating about 0.09 per unit of volatility. If you would invest  146,400  in AP Mller on December 29, 2024 and sell it today you would earn a total of  17,750  from holding AP Mller or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

InPlay Oil Corp  vs.  AP Mller

InPlay Oil Corp

Risk-Adjusted Performance

Weak

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

AP Møller

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AP Møller reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InPlay Oil and AP Møller

The main advantage of trading using opposite InPlay Oil and AP Møller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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 InPlay Oil Corp 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.