Correlation Between Computershare and AP Møller

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

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

Diversification Opportunities for Computershare and AP Møller

0.65

Correlation Coefficient

Computershare  AP Møller

Poor diversification

The 3 months correlation between Computershare and DP4B is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Computershare Limited and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller and Computershare 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 Computershare Limited are associated (or correlated) with AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of Computershare i.e., Computershare and AP Møller go up and down completely randomly.

Pair Corralation between Computershare and AP Møller

Assuming the 90 days horizon Computershare Limited is expected to generate 1.07 times more return on investment than AP Møller. However, Computershare is 1.07 times more volatile than AP Mller . It trades about 0.11 of its potential returns per unit of risk. AP Mller is currently generating about 0.08 per unit of risk. If you would invest  1,999  in Computershare Limited on December 23, 2024 and sell it today you would earn a total of  341.00  from holding Computershare Limited or generate 17.06% return on investment over 90 days.

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

Computershare Limited  vs.  AP Mller

Computershare Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Computershare reported solid returns over the last few months and may actually be approaching a breakup point.

AP Møller

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AP Møller reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computershare and AP Møller

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

The idea behind Computershare Limited 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.