Correlation Between Orsted AS and AP Mller

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

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

Diversification Opportunities for Orsted AS and AP Mller

0.57

Correlation Coefficient

Orsted AS  AP Mller

Very weak diversification

The 3 months correlation between Orsted and MAERSK-B is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and Orsted AS 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 Orsted AS 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 Orsted AS i.e., Orsted AS and AP Mller go up and down completely randomly.

Pair Corralation between Orsted AS and AP Mller

Assuming the 90 days trading horizon Orsted AS is expected to under-perform the AP Mller. In addition to that, Orsted AS is 1.14 times more volatile than AP Mller . It trades about -0.1 of its total potential returns per unit of risk. AP Mller is currently generating about 0.06 per unit of volatility. If you would invest  1,197,500  in AP Mller on November 29, 2024 and sell it today you would earn a total of  90,500  from holding AP Mller or generate 7.56% return on investment over 90 days.

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

Orsted AS  vs.  AP Mller

Orsted AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AP Mller

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AP Mller may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Orsted AS and AP Mller

The main advantage of trading using opposite Orsted AS and AP Mller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted AS 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 Orsted AS 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.