Correlation Between AP Mller and DFDS A/S
Can any of the company-specific risk be diversified away by investing in both AP Mller and DFDS A/S 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 DFDS A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and DFDS AS, you can compare the effects of market volatilities on AP Mller and DFDS A/S 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 DFDS A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and DFDS A/S.
Diversification Opportunities for AP Mller and DFDS A/S
Very good diversification
The 3 months correlation between DP4A and DFDS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS A/S 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 DFDS A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS A/S has no effect on the direction of AP Mller i.e., AP Mller and DFDS A/S go up and down completely randomly.
Pair Corralation between AP Mller and DFDS A/S
Assuming the 90 days trading horizon AP Mller is expected to under-perform the DFDS A/S. But the stock apears to be less risky and, when comparing its historical volatility, AP Mller is 1.04 times less risky than DFDS A/S. The stock trades about -0.25 of its potential returns per unit of risk. The DFDS AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,703 in DFDS AS on October 24, 2024 and sell it today you would earn a total of 17.00 from holding DFDS AS or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Mller vs. DFDS AS
Performance |
| Timeline |
| AP Mller |
| DFDS A/S |
AP Mller and DFDS A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and DFDS A/S
The main advantage of trading using opposite AP Mller and DFDS A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, DFDS A/S 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 DFDS A/S will offset losses from the drop in DFDS A/S's long position.| AP Mller vs. Air Transport Services | AP Mller vs. SMA Solar Technology | AP Mller vs. Align Technology | AP Mller vs. Kingdee International Software |
| DFDS A/S vs. UNIQA INSURANCE GR | DFDS A/S vs. INTER CARS SA | DFDS A/S vs. Broadridge Financial Solutions | DFDS A/S vs. Motorcar Parts of |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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