Correlation Between AP Mller and 4 Less

Can any of the company-specific risk be diversified away by investing in both AP Mller and 4 Less 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 Mller and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AP Mller and 4 Less Group, you can compare the effects of market volatilities on AP Mller and 4 Less 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 Mller with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and 4 Less.

Diversification Opportunities for AP Mller and 4 Less

-0.17

Correlation Coefficient

AP Mller  4 Less

Good diversification

The 3 months correlation between AMKBF and FLES is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and AP Mller 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 Mller are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of AP Mller i.e., AP Mller and 4 Less go up and down completely randomly.

Pair Corralation between AP Mller and 4 Less

Assuming the 90 days horizon AP Mller is expected to generate 0.19 times more return on investment than 4 Less. However, AP Mller is 5.13 times less risky than 4 Less. It trades about 0.18 of its potential returns per unit of risk. 4 Less Group is currently generating about -0.01 per unit of risk. If you would invest  130,600  in AP Mller on February 2, 2024 and sell it today you would earn a total of  14,400  from holding AP Mller or generate 11.03% return on investment over 90 days.

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

AP Mller   vs.  4 Less Group

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 fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

4 Less Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Mller and 4 Less

The main advantage of trading using opposite AP Mller and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind AP Mller and 4 Less Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .