Correlation Between Nordic American and AP Mller

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

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

Diversification Opportunities for Nordic American and AP Mller

-0.6

Correlation Coefficient

Nordic American  AP Mller

Excellent diversification

The 3 months correlation between Nordic and AMKBF is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and Nordic American 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 Nordic American Tankers are associated (or correlated) with AP Mller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Mller has no effect on the direction of Nordic American i.e., Nordic American and AP Mller go up and down completely randomly.

Pair Corralation between Nordic American and AP Mller

Considering the 90-day investment horizon Nordic American Tankers is expected to under-perform the AP Mller. In addition to that, Nordic American is 1.1 times more volatile than AP Mller . It trades about -0.24 of its total potential returns per unit of risk. AP Mller is currently generating about -0.13 per unit of volatility. If you would invest  163,608  in AP Mller on September 27, 2024 and sell it today you would lose (9,376) from holding AP Mller or give up 5.73% of portfolio value over 90 days.

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

Nordic American Tankers  vs.  AP Mller

Nordic American Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic American Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AP Mller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Mller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, AP Mller is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nordic American and AP Mller

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

The idea behind Nordic American Tankers and AP Mller 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.