Correlation Between AP Moeller and Golden Ocean

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

By analyzing existing cross correlation between AP Moeller and Golden Ocean Group, you can compare the effects of market volatilities on AP Moeller and Golden Ocean 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 Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Golden Ocean.

Diversification Opportunities for AP Moeller and Golden Ocean

-0.24

Correlation Coefficient

AP Moeller  Golden Ocean

Very good diversification

The 3 months correlation between AMKAF and Golden is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group 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 Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of AP Moeller i.e., AP Moeller and Golden Ocean go up and down completely randomly.

Pair Corralation between AP Moeller and Golden Ocean

Assuming the 90 days horizon AP Moeller is expected to generate 1.58 times more return on investment than Golden Ocean. However, AP Moeller is 1.58 times more volatile than Golden Ocean Group. It trades about -0.01 of its potential returns per unit of risk. Golden Ocean Group is currently generating about -0.6 per unit of risk. If you would invest  160,000  in AP Moeller on September 15, 2024 and sell it today you would lose (3,000) from holding AP Moeller or give up 1.87% of portfolio value over 90 days.

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

AP Moeller   vs.  Golden Ocean Group

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.

Golden Ocean Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with AP Moeller and Golden Ocean

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

The idea behind AP Moeller and Golden Ocean Group 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.