Correlation Between Hapag Lloyd and AP Moeller

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

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

Diversification Opportunities for Hapag Lloyd and AP Moeller

0.26

Correlation Coefficient

Hapag Lloyd  AP Moeller

Modest diversification

The 3 months correlation between Hapag and AMKAF is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd Aktiengesellschaft and AP Moeller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller and Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft 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 Hapag Lloyd i.e., Hapag Lloyd and AP Moeller go up and down completely randomly.

Pair Corralation between Hapag Lloyd and AP Moeller

Assuming the 90 days horizon Hapag Lloyd is expected to generate 3.06 times less return on investment than AP Moeller. But when comparing it to its historical volatility, Hapag Lloyd Aktiengesellschaft is 1.55 times less risky than AP Moeller. It trades about 0.03 of its potential returns per unit of risk. AP Moeller is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  175,037  in AP Moeller on February 1, 2024 and sell it today you would lose (25,647) from holding AP Moeller or give up 14.65% of portfolio value over 90 days.

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

Hapag Lloyd Aktiengesellschaft  vs.  AP Moeller

Hapag Lloyd Aktienge

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Hapag Lloyd 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 weak 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 Hapag Lloyd and AP Moeller

The main advantage of trading using opposite Hapag Lloyd and AP Moeller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.