Correlation Between CHEMICAL INDUSTRIES and AP Mller

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

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

Diversification Opportunities for CHEMICAL INDUSTRIES and AP Mller

0.0

Correlation Coefficient

CHEMICAL INDUSTRIES  AP Mller

Pay attention - limited upside

The 3 months correlation between CHEMICAL and DP4A is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and AP Mller go up and down completely randomly.

Pair Corralation between CHEMICAL INDUSTRIES and AP Mller

Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 5.37 times less return on investment than AP Mller. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 15.22 times less risky than AP Mller. It trades about 0.06 of its potential returns per unit of risk. AP Mller is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  123,711  in AP Mller on October 25, 2024 and sell it today you would earn a total of  11,889  from holding AP Mller or generate 9.61% return on investment over 90 days.

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

CHEMICAL INDUSTRIES  vs.  AP Mller

CHEMICAL INDUSTRIES

Risk-Adjusted Performance

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Very Weak

Over the last 90 days CHEMICAL INDUSTRIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, CHEMICAL INDUSTRIES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 basic indicators, 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 CHEMICAL INDUSTRIES and AP Mller

The main advantage of trading using opposite CHEMICAL INDUSTRIES and AP Mller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.