Correlation Between AP Moeller and DAmico International

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

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

Diversification Opportunities for AP Moeller and DAmico International

-0.58

Correlation Coefficient

AP Moeller  DAmico International

Excellent diversification

The 3 months correlation between AMKAF and DAmico is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller and dAmico International Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dAmico International and AP Moeller 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 AP Moeller are associated (or correlated) with DAmico International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dAmico International has no effect on the direction of AP Moeller i.e., AP Moeller and DAmico International go up and down completely randomly.

Pair Corralation between AP Moeller and DAmico International

Assuming the 90 days horizon AP Moeller is expected to generate 1.58 times more return on investment than DAmico International. However, AP Moeller is 1.58 times more volatile than dAmico International Shipping. It trades about 0.01 of its potential returns per unit of risk. dAmico International Shipping is currently generating about -0.04 per unit of risk. If you would invest  165,731  in AP Moeller on September 13, 2024 and sell it today you would lose (8,731) from holding AP Moeller or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

AP Moeller   vs.  dAmico International Shipping

AP Moeller

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AP Moeller reported solid returns over the last few months and may actually be approaching a breakup point.

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AP Moeller and DAmico International

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

The idea behind AP Moeller and dAmico International Shipping 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.