Correlation Between AP Møller and Equifax

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

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

Diversification Opportunities for AP Møller and Equifax

-0.62

Correlation Coefficient

AP Møller  Equifax

Excellent diversification

The 3 months correlation between DP4B and Equifax is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and AP Møller 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 Mller are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of AP Møller i.e., AP Møller and Equifax go up and down completely randomly.

Pair Corralation between AP Møller and Equifax

Assuming the 90 days trading horizon AP Mller is expected to under-perform the Equifax. In addition to that, AP Møller is 1.49 times more volatile than Equifax. It trades about -0.07 of its total potential returns per unit of risk. Equifax is currently generating about 0.28 per unit of volatility. If you would invest  23,561  in Equifax on September 19, 2024 and sell it today you would earn a total of  2,239  from holding Equifax or generate 9.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

AP Mller   vs.  Equifax

AP Møller

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AP Møller may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equifax 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 Møller and Equifax

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

The idea behind AP Mller and Equifax 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.