Correlation Between AP Mller and Carmat SA
Can any of the company-specific risk be diversified away by investing in both AP Mller and Carmat SA 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 Carmat SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Carmat SA, you can compare the effects of market volatilities on AP Mller and Carmat SA 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 Carmat SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Carmat SA.
Diversification Opportunities for AP Mller and Carmat SA
Excellent diversification
The 3 months correlation between DP4B and Carmat is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA 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 Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of AP Mller i.e., AP Mller and Carmat SA go up and down completely randomly.
Pair Corralation between AP Mller and Carmat SA
Assuming the 90 days trading horizon AP Mller is expected to generate 0.66 times more return on investment than Carmat SA. However, AP Mller is 1.52 times less risky than Carmat SA. It trades about 0.22 of its potential returns per unit of risk. Carmat SA is currently generating about -0.2 per unit of risk. If you would invest 134,400 in AP Mller on August 31, 2024 and sell it today you would earn a total of 20,350 from holding AP Mller or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AP Mller vs. Carmat SA
Performance |
| Timeline |
| AP Mller |
| Carmat SA |
AP Mller and Carmat SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and Carmat SA
The main advantage of trading using opposite AP Mller and Carmat SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Carmat SA 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 Carmat SA will offset losses from the drop in Carmat SA's long position.| AP Mller vs. Clarkson PLC | AP Mller vs. Wilh Wilhelmsen Holding | AP Mller vs. Superior Plus Corp | AP Mller vs. NMI Holdings |
| Carmat SA vs. China Communications Services | Carmat SA vs. Vulcan Materials | Carmat SA vs. NEWELL RUBBERMAID | Carmat SA vs. Liberty Broadband |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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