Correlation Between AP Møller and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both AP Møller and Solstad Offshore 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 Møller and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Solstad Offshore ASA, you can compare the effects of market volatilities on AP Møller and Solstad Offshore 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 Møller with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Møller and Solstad Offshore.
Diversification Opportunities for AP Møller and Solstad Offshore
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DP4B and Solstad is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and AP Møller 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of AP Møller i.e., AP Møller and Solstad Offshore go up and down completely randomly.
Pair Corralation between AP Møller and Solstad Offshore
Assuming the 90 days trading horizon AP Mller is expected to generate 0.75 times more return on investment than Solstad Offshore. However, AP Mller is 1.33 times less risky than Solstad Offshore. It trades about 0.0 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.01 per unit of risk. If you would invest 161,700 in AP Mller on September 25, 2024 and sell it today you would lose (7,100) from holding AP Mller or give up 4.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Mller vs. Solstad Offshore ASA
Performance |
| Timeline |
| AP Møller |
| Solstad Offshore ASA |
AP Møller and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Møller and Solstad Offshore
The main advantage of trading using opposite AP Møller and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Møller position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| AP Møller vs. AP Mller | AP Møller vs. ZIM Integrated Shipping | AP Møller vs. DFDS AS | AP Møller vs. Pacific Basin Shipping |
| Solstad Offshore vs. AP Mller | Solstad Offshore vs. AP Mller | Solstad Offshore vs. ZIM Integrated Shipping | Solstad Offshore vs. DFDS AS |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Positions Ratings 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 | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |