Correlation Between 3I Group and AP Moeller
Can any of the company-specific risk be diversified away by investing in both 3I Group and AP Moeller 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 3I Group and AP Moeller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3I Group PLC and AP Moeller , you can compare the effects of market volatilities on 3I Group and AP Moeller 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 3I Group with a short position of AP Moeller. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3I Group and AP Moeller.
Diversification Opportunities for 3I Group and AP Moeller
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between III and 0O77 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding 3I Group PLC and AP Moeller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller and 3I Group 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 3I Group PLC are associated (or correlated) with AP Moeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Moeller has no effect on the direction of 3I Group i.e., 3I Group and AP Moeller go up and down completely randomly.
Pair Corralation between 3I Group and AP Moeller
Assuming the 90 days trading horizon 3I Group PLC is expected to generate 0.55 times more return on investment than AP Moeller. However, 3I Group PLC is 1.81 times less risky than AP Moeller. It trades about 0.07 of its potential returns per unit of risk. AP Moeller is currently generating about 0.02 per unit of risk. If you would invest 333,607 in 3I Group PLC on September 24, 2024 and sell it today you would earn a total of 21,193 from holding 3I Group PLC or generate 6.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
3I Group PLC vs. AP Moeller
Performance |
Timeline |
3I Group PLC |
AP Moeller |
3I Group and AP Moeller Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 3I Group and AP Moeller
The main advantage of trading using opposite 3I Group and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3I Group position performs unexpectedly, AP Moeller 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 AP Moeller will offset losses from the drop in AP Moeller's long position.3I Group vs. Darden Restaurants | 3I Group vs. New Residential Investment | 3I Group vs. Kinnevik Investment AB | 3I Group vs. Scandinavian Tobacco Group |
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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 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.
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