Correlation Between AP Moeller and Nippon Yusen

Can any of the company-specific risk be diversified away by investing in both AP Moeller and Nippon Yusen 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 Moeller and Nippon Yusen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AP Moeller and Nippon Yusen Kabushiki, you can compare the effects of market volatilities on AP Moeller and Nippon Yusen 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 Moeller with a short position of Nippon Yusen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Nippon Yusen.

Diversification Opportunities for AP Moeller and Nippon Yusen

0.71

Correlation Coefficient

AP Moeller  Nippon Yusen

Poor diversification

The 3 months correlation between AMKAF and Nippon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki and AP Moeller 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 Moeller are associated (or correlated) with Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of AP Moeller i.e., AP Moeller and Nippon Yusen go up and down completely randomly.

Pair Corralation between AP Moeller and Nippon Yusen

Assuming the 90 days horizon AP Moeller is expected to generate 1.34 times more return on investment than Nippon Yusen. However, AP Moeller is 1.34 times more volatile than Nippon Yusen Kabushiki. It trades about 0.21 of its potential returns per unit of risk. Nippon Yusen Kabushiki is currently generating about -0.05 per unit of risk. If you would invest  126,200  in AP Moeller on January 26, 2024 and sell it today you would earn a total of  14,971  from holding AP Moeller or generate 11.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AP Moeller   vs.  Nippon Yusen Kabushiki

AP Moeller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Moeller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nippon Yusen Kabushiki

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Yusen Kabushiki has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AP Moeller and Nippon Yusen

The main advantage of trading using opposite AP Moeller and Nippon Yusen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Moeller position performs unexpectedly, Nippon Yusen 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 Nippon Yusen will offset losses from the drop in Nippon Yusen's long position.

The idea behind AP Moeller and Nippon Yusen Kabushiki 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 Commodity Directory module to find actively traded commodities issued by global exchanges.