Correlation Between AP Mller and Cessatech

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

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

Diversification Opportunities for AP Mller and Cessatech

0.01

Correlation Coefficient

AP Mller  Cessatech

Significant diversification

The 3 months correlation between MAERSK-B and Cessatech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Cessatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cessatech 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 Cessatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cessatech AS has no effect on the direction of AP Mller i.e., AP Mller and Cessatech go up and down completely randomly.

Pair Corralation between AP Mller and Cessatech

Assuming the 90 days trading horizon AP Mller is expected to generate 0.62 times more return on investment than Cessatech. However, AP Mller is 1.62 times less risky than Cessatech. It trades about 0.13 of its potential returns per unit of risk. Cessatech AS is currently generating about -0.04 per unit of risk. If you would invest  982,400  in AP Mller on September 3, 2024 and sell it today you would earn a total of  215,100  from holding AP Mller or generate 21.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	33.85%
Values	Daily Returns

AP Mller   vs.  Cessatech AS

AP Mller

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 10 (%) 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.

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with AP Mller and Cessatech

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

The idea behind AP Mller and Cessatech 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..