Correlation Between AP Mller and Moens Bank

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

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

Diversification Opportunities for AP Mller and Moens Bank

-0.71

Correlation Coefficient

AP Mller  Moens Bank

Pay attention - limited upside

The 3 months correlation between MAERSK-A and Moens is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Moens Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moens Bank AS and AP Mller 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 Moens Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moens Bank AS has no effect on the direction of AP Mller i.e., AP Mller and Moens Bank go up and down completely randomly.

Pair Corralation between AP Mller and Moens Bank

Assuming the 90 days trading horizon AP Mller is expected to generate 2.33 times more return on investment than Moens Bank. However, AP Mller is 2.33 times more volatile than Moens Bank AS. It trades about 0.12 of its potential returns per unit of risk. Moens Bank AS is currently generating about -0.07 per unit of risk. If you would invest  982,000  in AP Mller on September 4, 2024 and sell it today you would earn a total of  198,000  from holding AP Mller or generate 20.16% return on investment over 90 days.

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

AP Mller   vs.  Moens Bank AS

AP Mller

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, AP Mller sustained solid returns over the last few months and may actually be approaching a breakup point.

Moens Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moens Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Moens Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AP Mller and Moens Bank

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

The idea behind AP Mller and Moens Bank AS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.