Correlation Between London Security and AP Moeller
Can any of the company-specific risk be diversified away by investing in both London Security and AP Moeller 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 London Security and AP Moeller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and AP Moeller Maersk AS, you can compare the effects of market volatilities on London Security and AP Moeller 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 London Security with a short position of AP Moeller. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and AP Moeller.
Diversification Opportunities for London Security and AP Moeller
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and 0O76 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and AP Moeller Maersk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller Maersk and London Security 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 London Security Plc are associated (or correlated) with AP Moeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Moeller Maersk has no effect on the direction of London Security i.e., London Security and AP Moeller go up and down completely randomly.
Pair Corralation between London Security and AP Moeller
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the AP Moeller. But the stock apears to be less risky and, when comparing its historical volatility, London Security Plc is 1.38 times less risky than AP Moeller. The stock trades about -0.21 of its potential returns per unit of risk. The AP Moeller Maersk AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,080,000 in AP Moeller Maersk AS on September 2, 2024 and sell it today you would earn a total of 60,500 from holding AP Moeller Maersk AS or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. AP Moeller Maersk AS
Performance |
| Timeline |
| London Security Plc |
| AP Moeller Maersk |
London Security and AP Moeller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and AP Moeller
The main advantage of trading using opposite London Security and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, AP Moeller 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 Moeller will offset losses from the drop in AP Moeller's long position.| London Security vs. Zoom Video Communications | London Security vs. Amedeo Air Four | London Security vs. Power Metal Resources | London Security vs. Pentair PLC |
| AP Moeller vs. Uniper SE | AP Moeller vs. Mulberry Group PLC | AP Moeller vs. London Security Plc | AP Moeller vs. Triad Group PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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