Correlation Between AP Mller and Nippon Yusen

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

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

Diversification Opportunities for AP Mller and Nippon Yusen

-0.27

Correlation Coefficient

AP Mller  Nippon Yusen

Very good diversification

The 3 months correlation between AMKBF and Nippon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki and AP Mller 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 Mller are associated (or correlated) with Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of AP Mller i.e., AP Mller and Nippon Yusen go up and down completely randomly.

Pair Corralation between AP Mller and Nippon Yusen

Assuming the 90 days horizon AP Mller is expected to generate 1.2 times more return on investment than Nippon Yusen. However, AP Mller is 1.2 times more volatile than Nippon Yusen Kabushiki. It trades about 0.08 of its potential returns per unit of risk. Nippon Yusen Kabushiki is currently generating about -0.06 per unit of risk. If you would invest  147,285  in AP Mller on September 4, 2024 and sell it today you would earn a total of  17,861  from holding AP Mller or generate 12.13% return on investment over 90 days.

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

AP Mller   vs.  Nippon Yusen Kabushiki

AP Mller

Risk-Adjusted Performance

6 of 100

Insignificant

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 fragile fundamental drivers, AP Mller reported solid returns over the last few months and may actually be approaching a breakup point.

Nippon Yusen Kabushiki

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Yusen Kabushiki has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AP Mller and Nippon Yusen

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

The idea behind AP Mller and Nippon Yusen Kabushiki 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.