Correlation Between AP Moeller and Spindletop

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

Diversification Opportunities for AP Moeller and Spindletop

-0.29

Correlation Coefficient

AP Moeller  Spindletop

Very good diversification

The 3 months correlation between AMKBY and Spindletop is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Spindletop OG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spindletop OG 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 Spindletop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spindletop OG has no effect on the direction of AP Moeller i.e., AP Moeller and Spindletop go up and down completely randomly.

Pair Corralation between AP Moeller and Spindletop

Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 0.33 times more return on investment than Spindletop. However, AP Moeller Maersk AS is 2.99 times less risky than Spindletop. It trades about -0.02 of its potential returns per unit of risk. Spindletop OG is currently generating about -0.02 per unit of risk. If you would invest  796.00  in AP Moeller Maersk AS on October 26, 2024 and sell it today you would lose (77.00) from holding AP Moeller Maersk AS or give up 9.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

AP Moeller Maersk AS  vs.  Spindletop OG

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.

Spindletop OG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spindletop OG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AP Moeller and Spindletop

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

The idea behind AP Moeller Maersk AS and Spindletop OG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.