Correlation Between AP Moeller and Western Bulk
Can any of the company-specific risk be diversified away by investing in both AP Moeller and Western Bulk 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 Western Bulk 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 Western Bulk Chartering, you can compare the effects of market volatilities on AP Moeller and Western Bulk 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 Western Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Western Bulk.
Diversification Opportunities for AP Moeller and Western Bulk
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AMKBY and Western is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Western Bulk Chartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Bulk Chartering 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 Western Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Bulk Chartering has no effect on the direction of AP Moeller i.e., AP Moeller and Western Bulk go up and down completely randomly.
Pair Corralation between AP Moeller and Western Bulk
Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 0.51 times more return on investment than Western Bulk. However, AP Moeller Maersk AS is 1.97 times less risky than Western Bulk. It trades about 0.1 of its potential returns per unit of risk. Western Bulk Chartering is currently generating about -0.25 per unit of risk. If you would invest 754.00 in AP Moeller Maersk AS on August 29, 2024 and sell it today you would earn a total of 46.00 from holding AP Moeller Maersk AS or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Moeller Maersk AS vs. Western Bulk Chartering
Performance |
| Timeline |
| AP Moeller Maersk |
| Western Bulk Chartering |
AP Moeller and Western Bulk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Moeller and Western Bulk
The main advantage of trading using opposite AP Moeller and Western Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Moeller position performs unexpectedly, Western Bulk 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 Western Bulk will offset losses from the drop in Western Bulk's long position.The idea behind AP Moeller Maersk AS and Western Bulk Chartering 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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