Correlation Between NKT AS and AP Mller

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

Diversification Opportunities for NKT AS and AP Mller

NKTMAERSK-BDiversified AwayNKTMAERSK-BDiversified Away100%
-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between NKT and MAERSK-B is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and NKT AS 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 NKT AS 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 NKT AS i.e., NKT AS and AP Mller go up and down completely randomly.

Pair Corralation between NKT AS and AP Mller

Assuming the 90 days trading horizon NKT AS is expected to generate 0.79 times more return on investment than AP Mller. However, NKT AS is 1.26 times less risky than AP Mller. It trades about 0.04 of its potential returns per unit of risk. AP Mller is currently generating about 0.02 per unit of risk. If you would invest  36,874  in NKT AS on September 19, 2024 and sell it today you would earn a total of  15,176  from holding NKT AS or generate 41.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

NKT AS  vs.  AP Mller

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15NKT MAERSK-B
       Timeline  
NKT AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NKT AS 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec500550600650
AP Mller 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, AP Mller may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec9,50010,00010,50011,00011,50012,00012,500

NKT AS and AP Mller Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.28-2.46-1.63-0.810.00.671.352.032.71 0.050.060.070.080.090.100.11
JavaScript chart by amCharts 3.21.15NKT MAERSK-B
       Returns  

Pair Trading with NKT AS and AP Mller

The main advantage of trading using opposite NKT AS and AP Mller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS 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 NKT AS 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.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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