Correlation Between AP Moeller and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both AP Moeller and Westlake Chemical 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 Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Moeller Maersk AS and Westlake Chemical Corp, you can compare the effects of market volatilities on AP Moeller and Westlake Chemical 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 Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Westlake Chemical.
Diversification Opportunities for AP Moeller and Westlake Chemical
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0O76 and Westlake is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp 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 Maersk AS are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of AP Moeller i.e., AP Moeller and Westlake Chemical go up and down completely randomly.
Pair Corralation between AP Moeller and Westlake Chemical
Assuming the 90 days trading horizon AP Moeller Maersk AS is expected to under-perform the Westlake Chemical. In addition to that, AP Moeller is 1.05 times more volatile than Westlake Chemical Corp. It trades about -0.34 of its total potential returns per unit of risk. Westlake Chemical Corp is currently generating about 0.01 per unit of volatility. If you would invest 11,337 in Westlake Chemical Corp on November 3, 2024 and sell it today you would earn a total of 19.00 from holding Westlake Chemical Corp or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Moeller Maersk AS vs. Westlake Chemical Corp
Performance |
| Timeline |
| AP Moeller Maersk |
| Westlake Chemical Corp |
AP Moeller and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Moeller and Westlake Chemical
The main advantage of trading using opposite AP Moeller and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Moeller position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| AP Moeller vs. JB Hunt Transport | AP Moeller vs. Spotify Technology SA | AP Moeller vs. Roper Technologies | AP Moeller vs. Empire Metals Limited |
| Westlake Chemical vs. Air Products Chemicals | Westlake Chemical vs. Cornish Metals | Westlake Chemical vs. Qurate Retail Series | Westlake Chemical vs. Grieg Seafood |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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