Correlation Between EJF Investments and AP Moeller

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

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

Diversification Opportunities for EJF Investments and AP Moeller

-0.13

Correlation Coefficient

EJF Investments  AP Moeller

Good diversification

The 3 months correlation between EJF and 0O76 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments 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 EJF Investments 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 EJF Investments 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 EJF Investments i.e., EJF Investments and AP Moeller go up and down completely randomly.

Pair Corralation between EJF Investments and AP Moeller

Assuming the 90 days trading horizon EJF Investments is expected to generate 0.44 times more return on investment than AP Moeller. However, EJF Investments is 2.25 times less risky than AP Moeller. It trades about 0.35 of its potential returns per unit of risk. AP Moeller Maersk AS is currently generating about -0.28 per unit of risk. If you would invest  12,000  in EJF Investments on October 25, 2024 and sell it today you would earn a total of  750.00  from holding EJF Investments or generate 6.25% return on investment over 90 days.

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

EJF Investments  vs.  AP Moeller Maersk AS

EJF Investments

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EJF Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 comparatively stable basic indicators, AP Moeller is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EJF Investments and AP Moeller

The main advantage of trading using opposite EJF Investments and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments 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 EJF Investments 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.