Correlation Between AP Mller and Formuepleje Limittellus

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

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

Diversification Opportunities for AP Mller and Formuepleje Limittellus

0.63

Correlation Coefficient

AP Mller  Formuepleje Limittellus

Poor diversification

The 3 months correlation between MAERSK-B and Formuepleje is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Formuepleje Limittellus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formuepleje Limittellus 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 Formuepleje Limittellus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formuepleje Limittellus has no effect on the direction of AP Mller i.e., AP Mller and Formuepleje Limittellus go up and down completely randomly.

Pair Corralation between AP Mller and Formuepleje Limittellus

Assuming the 90 days trading horizon AP Mller is expected to generate 3.95 times more return on investment than Formuepleje Limittellus. However, AP Mller is 3.95 times more volatile than Formuepleje Limittellus. It trades about 0.1 of its potential returns per unit of risk. Formuepleje Limittellus is currently generating about 0.13 per unit of risk. If you would invest  1,020,000  in AP Mller on September 13, 2024 and sell it today you would earn a total of  171,500  from holding AP Mller or generate 16.81% return on investment over 90 days.

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

AP Mller   vs.  Formuepleje Limittellus

AP Mller

Risk-Adjusted Performance

8 of 100

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.

Formuepleje Limittellus

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Limittellus are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Formuepleje Limittellus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AP Mller and Formuepleje Limittellus

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

The idea behind AP Mller and Formuepleje Limittellus 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.