Correlation Between DSV Panalpina and AP Mller

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

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

Diversification Opportunities for DSV Panalpina and AP Mller

0.83

Correlation Coefficient

DSV Panalpina  AP Mller

Very poor diversification

The 3 months correlation between DSV and MAERSK-A is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and DSV Panalpina 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 DSV Panalpina 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 DSV Panalpina i.e., DSV Panalpina and AP Mller go up and down completely randomly.

Pair Corralation between DSV Panalpina and AP Mller

Assuming the 90 days trading horizon DSV Panalpina AS is expected to under-perform the AP Mller. But the stock apears to be less risky and, when comparing its historical volatility, DSV Panalpina AS is 1.09 times less risky than AP Mller. The stock trades about -0.26 of its potential returns per unit of risk. The AP Mller is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  883,000  in AP Mller on January 31, 2024 and sell it today you would earn a total of  154,000  from holding AP Mller or generate 17.44% return on investment over 90 days.

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

DSV Panalpina AS  vs.  AP Mller

DSV Panalpina AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSV Panalpina AS 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 very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

AP Mller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Mller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with DSV Panalpina and AP Mller

The main advantage of trading using opposite DSV Panalpina and AP Mller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSV Panalpina 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 DSV Panalpina 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.