Correlation Between AP Moeller and North Peak

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

Diversification Opportunities for AP Moeller and North Peak

-0.2

Correlation Coefficient

AP Moeller  North Peak

Good diversification

The 3 months correlation between AMKBY and North is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and North Peak Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Peak Resources 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 North Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Peak Resources has no effect on the direction of AP Moeller i.e., AP Moeller and North Peak go up and down completely randomly.

Pair Corralation between AP Moeller and North Peak

Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 0.48 times more return on investment than North Peak. However, AP Moeller Maersk AS is 2.08 times less risky than North Peak. It trades about -0.05 of its potential returns per unit of risk. North Peak Resources is currently generating about -0.08 per unit of risk. If you would invest  786.00  in AP Moeller Maersk AS on October 21, 2024 and sell it today you would lose (78.00) from holding AP Moeller Maersk AS or give up 9.92% of portfolio value over 90 days.

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

AP Moeller Maersk AS  vs.  North Peak Resources

AP Moeller Maersk

Risk-Adjusted Performance

0 of 100

Very Weak

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

North Peak Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Peak Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AP Moeller and North Peak

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

The idea behind AP Moeller Maersk AS and North Peak Resources 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.