Correlation Between AP Moeller and Paragon Technologies

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

Diversification Opportunities for AP Moeller and Paragon Technologies

-0.41

Correlation Coefficient

AP Moeller  Paragon Technologies

Very good diversification

The 3 months correlation between AMKBY and Paragon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Paragon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Technologies 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 Paragon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Technologies has no effect on the direction of AP Moeller i.e., AP Moeller and Paragon Technologies go up and down completely randomly.

Pair Corralation between AP Moeller and Paragon Technologies

Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 0.68 times more return on investment than Paragon Technologies. However, AP Moeller Maersk AS is 1.48 times less risky than Paragon Technologies. It trades about 0.06 of its potential returns per unit of risk. Paragon Technologies is currently generating about 0.03 per unit of risk. If you would invest  636.00  in AP Moeller Maersk AS on December 4, 2024 and sell it today you would earn a total of  240.00  from holding AP Moeller Maersk AS or generate 37.74% return on investment over 90 days.

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

AP Moeller Maersk AS  vs.  Paragon Technologies

AP Moeller Maersk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Paragon Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Paragon Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Moeller and Paragon Technologies

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

The idea behind AP Moeller Maersk AS and Paragon Technologies 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.