Correlation Between AP Mller and BankInv Kort

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

By analyzing existing cross correlation between AP Mller and BankInv Kort HY, you can compare the effects of market volatilities on AP Mller and BankInv Kort 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 BankInv Kort. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and BankInv Kort.

Diversification Opportunities for AP Mller and BankInv Kort

0.38

Correlation Coefficient

AP Mller  BankInv Kort

Weak diversification

The 3 months correlation between MAERSK-B and BankInv is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and BankInv Kort HY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv Kort HY 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 BankInv Kort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv Kort HY has no effect on the direction of AP Mller i.e., AP Mller and BankInv Kort go up and down completely randomly.

Pair Corralation between AP Mller and BankInv Kort

Assuming the 90 days trading horizon AP Mller is expected to generate 12.16 times more return on investment than BankInv Kort. However, AP Mller is 12.16 times more volatile than BankInv Kort HY. It trades about 0.04 of its potential returns per unit of risk. BankInv Kort HY is currently generating about -0.02 per unit of risk. If you would invest  1,207,500  in AP Mller on October 9, 2024 and sell it today you would earn a total of  12,500  from holding AP Mller or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AP Mller   vs.  BankInv Kort HY

AP Mller

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 9 (%) 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.

BankInv Kort HY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BankInv Kort HY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AP Mller and BankInv Kort

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

The idea behind AP Mller and BankInv Kort HY 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.