Correlation Between Applied Materials and AP Moeller
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and AP Moeller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and AP Moeller Maersk AS, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of AP Moeller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and AP Moeller.
Diversification Opportunities for Applied Materials and AP Moeller
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and 0O76 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and AP Moeller Maersk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller Maersk and Applied Materials 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 Applied Materials 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 Maersk has no effect on the direction of Applied Materials i.e., Applied Materials and AP Moeller go up and down completely randomly.
Pair Corralation between Applied Materials and AP Moeller
Assuming the 90 days trading horizon Applied Materials is expected to generate 12.36 times less return on investment than AP Moeller. But when comparing it to its historical volatility, Applied Materials is 1.02 times less risky than AP Moeller. It trades about 0.01 of its potential returns per unit of risk. AP Moeller Maersk AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,095,000 in AP Moeller Maersk AS on September 4, 2024 and sell it today you would earn a total of 61,500 from holding AP Moeller Maersk AS or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. AP Moeller Maersk AS
Performance |
| Timeline |
| Applied Materials |
| AP Moeller Maersk |
Applied Materials and AP Moeller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and AP Moeller
The main advantage of trading using opposite Applied Materials and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Hyundai Motor | Applied Materials vs. Toyota Motor Corp |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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