Correlation Between AP Moeller and International Container

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

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

Diversification Opportunities for AP Moeller and International Container

-0.32

Correlation Coefficient

AP Moeller  International Container

Very good diversification

The 3 months correlation between AMKAF and International is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller and International Container Termin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Container 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 International Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Container has no effect on the direction of AP Moeller i.e., AP Moeller and International Container go up and down completely randomly.

Pair Corralation between AP Moeller and International Container

Assuming the 90 days horizon AP Moeller is expected to generate 5.23 times less return on investment than International Container. But when comparing it to its historical volatility, AP Moeller is 1.12 times less risky than International Container. It trades about 0.01 of its potential returns per unit of risk. International Container Terminal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  422.00  in International Container Terminal on September 14, 2024 and sell it today you would earn a total of  220.00  from holding International Container Terminal or generate 52.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.66%
Values	Daily Returns

AP Moeller   vs.  International Container Termin

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.

International Container

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Container Terminal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, International Container is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AP Moeller and International Container

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

The idea behind AP Moeller and International Container Terminal 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.