Correlation Between Comfort Systems and AP Moeller

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

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

Diversification Opportunities for Comfort Systems and AP Moeller

-0.81

Correlation Coefficient

Comfort Systems  AP Moeller

Pay attention - limited upside

The 3 months correlation between Comfort and AMKAF is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA and AP Moeller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller and Comfort Systems 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 Comfort Systems USA 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 has no effect on the direction of Comfort Systems i.e., Comfort Systems and AP Moeller go up and down completely randomly.

Pair Corralation between Comfort Systems and AP Moeller

Considering the 90-day investment horizon Comfort Systems USA is expected to under-perform the AP Moeller. But the stock apears to be less risky and, when comparing its historical volatility, Comfort Systems USA is 1.82 times less risky than AP Moeller. The stock trades about -0.04 of its potential returns per unit of risk. The AP Moeller is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  128,356  in AP Moeller on February 3, 2024 and sell it today you would earn a total of  17,544  from holding AP Moeller or generate 13.67% return on investment over 90 days.

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

Comfort Systems USA  vs.  AP Moeller

Comfort Systems USA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comfort Systems USA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Comfort Systems showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Comfort Systems and AP Moeller

The main advantage of trading using opposite Comfort Systems and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comfort Systems 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.

The idea behind Comfort Systems USA and AP Moeller 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.