Correlation Between AP Møller and CSSC Offshore

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

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

Diversification Opportunities for AP Møller and CSSC Offshore

-0.82

Correlation Coefficient

AP Møller  CSSC Offshore

Pay attention - limited upside

The 3 months correlation between DP4B and CSSC is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine 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 CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of AP Møller i.e., AP Møller and CSSC Offshore go up and down completely randomly.

Pair Corralation between AP Møller and CSSC Offshore

Assuming the 90 days trading horizon AP Mller is expected to generate 0.78 times more return on investment than CSSC Offshore. However, AP Mller is 1.28 times less risky than CSSC Offshore. It trades about 0.1 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about -0.07 per unit of risk. If you would invest  136,150  in AP Mller on September 15, 2024 and sell it today you would earn a total of  21,300  from holding AP Mller or generate 15.64% return on investment over 90 days.

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

AP Mller   vs.  CSSC Offshore Marine

AP Møller

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AP Møller reported solid returns over the last few months and may actually be approaching a breakup point.

CSSC Offshore Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSSC Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AP Møller and CSSC Offshore

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

The idea behind AP Mller and CSSC Offshore Marine 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.