Correlation Between AP Mller and Aquaporin

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

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

Diversification Opportunities for AP Mller and Aquaporin

-0.12

Correlation Coefficient

AP Mller  Aquaporin

Good diversification

The 3 months correlation between MAERSK-A and Aquaporin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Aquaporin AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquaporin AS and AP Mller 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 Mller are associated (or correlated) with Aquaporin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquaporin AS has no effect on the direction of AP Mller i.e., AP Mller and Aquaporin go up and down completely randomly.

Pair Corralation between AP Mller and Aquaporin

Assuming the 90 days trading horizon AP Mller is expected to generate 0.57 times more return on investment than Aquaporin. However, AP Mller is 1.76 times less risky than Aquaporin. It trades about 0.11 of its potential returns per unit of risk. Aquaporin AS is currently generating about -0.04 per unit of risk. If you would invest  1,063,148  in AP Mller on December 2, 2024 and sell it today you would earn a total of  180,852  from holding AP Mller or generate 17.01% return on investment over 90 days.

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

AP Mller   vs.  Aquaporin AS

AP Mller

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AP Mller sustained solid returns over the last few months and may actually be approaching a breakup point.

Aquaporin AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquaporin AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AP Mller and Aquaporin

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

The idea behind AP Mller and Aquaporin 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.