Correlation Between AP Moeller and Orient Overseas

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

By analyzing existing cross correlation between AP Moeller and Orient Overseas International, you can compare the effects of market volatilities on AP Moeller and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Orient Overseas.

Diversification Opportunities for AP Moeller and Orient Overseas

0.25

Correlation Coefficient

AP Moeller  Orient Overseas

Modest diversification

The 3 months correlation between AMKAF and Orient is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller and Orient Overseas International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas Inte 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 are associated (or correlated) with Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas Inte has no effect on the direction of AP Moeller i.e., AP Moeller and Orient Overseas go up and down completely randomly.

Pair Corralation between AP Moeller and Orient Overseas

Assuming the 90 days horizon AP Moeller is expected to generate 2.16 times more return on investment than Orient Overseas. However, AP Moeller is 2.16 times more volatile than Orient Overseas International. It trades about 0.07 of its potential returns per unit of risk. Orient Overseas International is currently generating about -0.01 per unit of risk. If you would invest  152,775  in AP Moeller on December 29, 2024 and sell it today you would earn a total of  19,430  from holding AP Moeller or generate 12.72% 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   vs.  Orient Overseas International

AP Moeller

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AP Moeller reported solid returns over the last few months and may actually be approaching a breakup point.

Orient Overseas Inte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orient Overseas International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Orient Overseas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AP Moeller and Orient Overseas

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

The idea behind AP Moeller and Orient Overseas International 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.