Correlation Between AP Mller and Glunz Jensen

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Can any of the company-specific risk be diversified away by investing in both AP Mller and Glunz Jensen 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 Glunz Jensen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Glunz Jensen, you can compare the effects of market volatilities on AP Mller and Glunz Jensen 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 Glunz Jensen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Glunz Jensen.

Diversification Opportunities for AP Mller and Glunz Jensen

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between MAERSK-A and Glunz is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Glunz Jensen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glunz Jensen 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 Glunz Jensen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glunz Jensen has no effect on the direction of AP Mller i.e., AP Mller and Glunz Jensen go up and down completely randomly.

Pair Corralation between AP Mller and Glunz Jensen

Assuming the 90 days trading horizon AP Mller is expected to generate 1.34 times more return on investment than Glunz Jensen. However, AP Mller is 1.34 times more volatile than Glunz Jensen. It trades about 0.02 of its potential returns per unit of risk. Glunz Jensen is currently generating about 0.01 per unit of risk. If you would invest  1,049,479  in AP Mller on September 1, 2024 and sell it today you would earn a total of  107,521  from holding AP Mller or generate 10.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.78%
ValuesDaily Returns

AP Mller   vs.  Glunz Jensen

 Performance 
       Timeline  
AP Mller 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AP Mller sustained solid returns over the last few months and may actually be approaching a breakup point.
Glunz Jensen 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Glunz Jensen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Glunz Jensen is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

AP Mller and Glunz Jensen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AP Mller and Glunz Jensen

The main advantage of trading using opposite AP Mller and Glunz Jensen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Glunz Jensen 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 Glunz Jensen will offset losses from the drop in Glunz Jensen's long position.
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The idea behind AP Mller and Glunz Jensen 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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