Correlation Between AP Moeller and Golden Energy

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

Diversification Opportunities for AP Moeller and Golden Energy

-0.4

Correlation Coefficient

AP Moeller  Golden Energy

Very good diversification

The 3 months correlation between AMKBY and Golden is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore 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 Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of AP Moeller i.e., AP Moeller and Golden Energy go up and down completely randomly.

Pair Corralation between AP Moeller and Golden Energy

Assuming the 90 days horizon AP Moeller is expected to generate 76.01 times less return on investment than Golden Energy. But when comparing it to its historical volatility, AP Moeller Maersk AS is 17.36 times less risky than Golden Energy. It trades about 0.01 of its potential returns per unit of risk. Golden Energy Offshore is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Golden Energy Offshore on October 26, 2024 and sell it today you would earn a total of  159.00  from holding Golden Energy Offshore or generate 993.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

AP Moeller Maersk AS  vs.  Golden Energy Offshore

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 fairly strong fundamental drivers, AP Moeller is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Golden Energy Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic 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 Golden Energy

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

The idea behind AP Moeller Maersk AS and Golden Energy Offshore 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.