Correlation Between AP Mller and AWILCO LNG
Can any of the company-specific risk be diversified away by investing in both AP Mller and AWILCO LNG 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 AWILCO LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and AWILCO LNG NK, you can compare the effects of market volatilities on AP Mller and AWILCO LNG 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 AWILCO LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and AWILCO LNG.
Diversification Opportunities for AP Mller and AWILCO LNG
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DP4A and AWILCO is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and AWILCO LNG NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AWILCO LNG NK 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 AWILCO LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AWILCO LNG NK has no effect on the direction of AP Mller i.e., AP Mller and AWILCO LNG go up and down completely randomly.
Pair Corralation between AP Mller and AWILCO LNG
Assuming the 90 days trading horizon AP Mller is expected to generate 2.66 times less return on investment than AWILCO LNG. But when comparing it to its historical volatility, AP Mller is 1.85 times less risky than AWILCO LNG. It trades about 0.04 of its potential returns per unit of risk. AWILCO LNG NK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 15.00 in AWILCO LNG NK on September 12, 2024 and sell it today you would earn a total of 19.00 from holding AWILCO LNG NK or generate 126.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
AP Mller vs. AWILCO LNG NK
Performance |
| Timeline |
| AP Mller |
| AWILCO LNG NK |
AP Mller and AWILCO LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and AWILCO LNG
The main advantage of trading using opposite AP Mller and AWILCO LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, AWILCO LNG 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 AWILCO LNG will offset losses from the drop in AWILCO LNG's long position.| AP Mller vs. United Rentals | AP Mller vs. SCANSOURCE | AP Mller vs. SHIN ETSU CHEMICAL | AP Mller vs. Perseus Mining Limited |
| AWILCO LNG vs. GALENA MINING LTD | AWILCO LNG vs. Tower One Wireless | AWILCO LNG vs. Zijin Mining Group | AWILCO LNG vs. Consolidated Communications Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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