Correlation Between AP Moeller and Surge Components

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

Diversification Opportunities for AP Moeller and Surge Components

-0.49

Correlation Coefficient

AP Moeller  Surge Components

Very good diversification

The 3 months correlation between AMKBY and Surge is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Surge Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Components 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 Surge Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Components has no effect on the direction of AP Moeller i.e., AP Moeller and Surge Components go up and down completely randomly.

Pair Corralation between AP Moeller and Surge Components

Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 0.8 times more return on investment than Surge Components. However, AP Moeller Maersk AS is 1.25 times less risky than Surge Components. It trades about 0.01 of its potential returns per unit of risk. Surge Components is currently generating about -0.01 per unit of risk. If you would invest  713.00  in AP Moeller Maersk AS on October 22, 2024 and sell it today you would lose (5.00) from holding AP Moeller Maersk AS or give up 0.7% of portfolio value 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.  Surge Components

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.

Surge Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge Components has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Surge Components is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AP Moeller and Surge Components

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

The idea behind AP Moeller Maersk AS and Surge Components 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.