Correlation Between AP Mller and Gabriel Holding

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

Diversification Opportunities for AP Mller and Gabriel Holding

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between MAERSK-B and Gabriel is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Gabriel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabriel Holding 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 Gabriel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabriel Holding has no effect on the direction of AP Mller i.e., AP Mller and Gabriel Holding go up and down completely randomly.

Pair Corralation between AP Mller and Gabriel Holding

Assuming the 90 days trading horizon AP Mller is expected to generate 0.61 times more return on investment than Gabriel Holding. However, AP Mller is 1.65 times less risky than Gabriel Holding. It trades about 0.14 of its potential returns per unit of risk. Gabriel Holding is currently generating about -0.13 per unit of risk. If you would invest  1,041,000  in AP Mller on August 29, 2024 and sell it today you would earn a total of  104,000  from holding AP Mller or generate 9.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AP Mller   vs.  Gabriel Holding

 Performance 
       Timeline  
AP Mller 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 6 (%) 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.
Gabriel Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gabriel Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

AP Mller and Gabriel Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AP Mller and Gabriel Holding

The main advantage of trading using opposite AP Mller and Gabriel Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Gabriel Holding 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 Gabriel Holding will offset losses from the drop in Gabriel Holding's long position.
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The idea behind AP Mller and Gabriel Holding 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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