Correlation Between Capital Metals and AP Moeller

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

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

Diversification Opportunities for Capital Metals and AP Moeller

-0.36

Correlation Coefficient

Capital Metals  AP Moeller

Very good diversification

The 3 months correlation between Capital and 0O76 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC 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 Capital Metals 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 Capital Metals PLC 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 Capital Metals i.e., Capital Metals and AP Moeller go up and down completely randomly.

Pair Corralation between Capital Metals and AP Moeller

Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the AP Moeller. But the stock apears to be less risky and, when comparing its historical volatility, Capital Metals PLC is 1.13 times less risky than AP Moeller. The stock trades about -0.34 of its potential returns per unit of risk. The AP Moeller Maersk AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,167,000  in AP Moeller Maersk AS on October 8, 2024 and sell it today you would earn a total of  27,500  from holding AP Moeller Maersk AS or generate 2.36% return on investment over 90 days.

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

Capital Metals PLC  vs.  AP Moeller Maersk AS

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AP Moeller Maersk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AP Moeller unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Metals and AP Moeller

The main advantage of trading using opposite Capital Metals and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals 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 Capital Metals PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.