Correlation Between Metals Exploration and AP Moeller

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

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

Diversification Opportunities for Metals Exploration and AP Moeller

-0.15

Correlation Coefficient

Metals Exploration  AP Moeller

Good diversification

The 3 months correlation between Metals and 0O76 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc 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 Metals Exploration 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 Metals Exploration Plc 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 Metals Exploration i.e., Metals Exploration and AP Moeller go up and down completely randomly.

Pair Corralation between Metals Exploration and AP Moeller

Assuming the 90 days trading horizon Metals Exploration is expected to generate 1.69 times less return on investment than AP Moeller. In addition to that, Metals Exploration is 1.54 times more volatile than AP Moeller Maersk AS. It trades about 0.03 of its total potential returns per unit of risk. AP Moeller Maersk AS is currently generating about 0.09 per unit of volatility. If you would invest  1,037,109  in AP Moeller Maersk AS on December 23, 2024 and sell it today you would earn a total of  122,891  from holding AP Moeller Maersk AS or generate 11.85% return on investment over 90 days.

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

Metals Exploration Plc  vs.  AP Moeller Maersk AS

Metals Exploration Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Metals Exploration may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AP Moeller Maersk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AP Moeller unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metals Exploration and AP Moeller

The main advantage of trading using opposite Metals Exploration and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration 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 Metals Exploration Plc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.