Correlation Between FLSmidth and AP Mller
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By analyzing existing cross correlation between FLSmidth Co and AP Mller , you can compare the effects of market volatilities on FLSmidth and AP Mller 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 FLSmidth with a short position of AP Mller. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLSmidth and AP Mller.
Diversification Opportunities for FLSmidth and AP Mller
Poor diversification
The 3 months correlation between FLSmidth and MAERSK-A is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FLSmidth Co and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and FLSmidth 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 FLSmidth Co are associated (or correlated) with AP Mller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Mller has no effect on the direction of FLSmidth i.e., FLSmidth and AP Mller go up and down completely randomly.
Pair Corralation between FLSmidth and AP Mller
Assuming the 90 days trading horizon FLSmidth is expected to generate 1.08 times less return on investment than AP Mller. But when comparing it to its historical volatility, FLSmidth Co is 2.37 times less risky than AP Mller. It trades about 0.27 of its potential returns per unit of risk. AP Mller is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,106,000 in AP Mller on September 4, 2024 and sell it today you would earn a total of 74,000 from holding AP Mller or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLSmidth Co vs. AP Mller
Performance |
| Timeline |
| FLSmidth |
| AP Mller |
FLSmidth and AP Mller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLSmidth and AP Mller
The main advantage of trading using opposite FLSmidth and AP Mller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLSmidth position performs unexpectedly, AP Mller 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 AP Mller will offset losses from the drop in AP Mller's long position.The idea behind FLSmidth Co and AP Mller 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.| AP Mller vs. Dampskibsselskabet Norden AS | AP Mller vs. FLSmidth Co | AP Mller vs. Zealand Pharma AS | AP Mller vs. NKT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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