Correlation Between AP Moeller and SITC International

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

Diversification Opportunities for AP Moeller and SITC International

0.21

Correlation Coefficient

AP Moeller  SITC International

Modest diversification

The 3 months correlation between AMKBY and SITC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of AP Moeller i.e., AP Moeller and SITC International go up and down completely randomly.

Pair Corralation between AP Moeller and SITC International

Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 0.43 times more return on investment than SITC International. However, AP Moeller Maersk AS is 2.35 times less risky than SITC International. It trades about 0.1 of its potential returns per unit of risk. SITC International Holdings is currently generating about 0.04 per unit of risk. If you would invest  755.00  in AP Moeller Maersk AS on December 28, 2024 and sell it today you would earn a total of  115.00  from holding AP Moeller Maersk AS or generate 15.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

AP Moeller Maersk AS  vs.  SITC International Holdings

AP Moeller Maersk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, AP Moeller showed solid returns over the last few months and may actually be approaching a breakup point.

SITC International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, SITC International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Moeller and SITC International

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

The idea behind AP Moeller Maersk AS and SITC International Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.