Correlation Between COSCO SHIPPING and AP Moeller

Can any of the company-specific risk be diversified away by investing in both COSCO SHIPPING and AP Moeller 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 COSCO SHIPPING and AP Moeller into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COSCO SHIPPING Holdings and AP Moeller Maersk AS, you can compare the effects of market volatilities on COSCO SHIPPING and AP Moeller 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 COSCO SHIPPING with a short position of AP Moeller. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and AP Moeller.

Diversification Opportunities for COSCO SHIPPING and AP Moeller

0.25

Correlation Coefficient

COSCO SHIPPING  AP Moeller

Modest diversification

The 3 months correlation between COSCO and AMKBY is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and AP Moeller Maersk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller Maersk and COSCO SHIPPING 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 COSCO SHIPPING Holdings are associated (or correlated) with AP Moeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Moeller Maersk has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and AP Moeller go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and AP Moeller

Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to under-perform the AP Moeller. But the pink sheet apears to be less risky and, when comparing its historical volatility, COSCO SHIPPING Holdings is 1.14 times less risky than AP Moeller. The pink sheet trades about -0.04 of its potential returns per unit of risk. The AP Moeller Maersk AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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	100.0%
Values	Daily Returns

COSCO SHIPPING Holdings  vs.  AP Moeller Maersk AS

COSCO SHIPPING Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSCO SHIPPING Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with COSCO SHIPPING and AP Moeller

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

The idea behind COSCO SHIPPING Holdings and AP Moeller Maersk AS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.