Correlation Between AP Moeller and Mitsui OSK

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

By analyzing existing cross correlation between AP Moeller Maersk AS and Mitsui OSK Lines, you can compare the effects of market volatilities on AP Moeller and Mitsui OSK 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 Mitsui OSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Moeller and Mitsui OSK.

Diversification Opportunities for AP Moeller and Mitsui OSK

0.61

Correlation Coefficient

AP Moeller  Mitsui OSK

Poor diversification

The 3 months correlation between AMKBY and Mitsui is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AP Moeller Maersk AS and Mitsui OSK Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui OSK Lines 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 Maersk AS are associated (or correlated) with Mitsui OSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui OSK Lines has no effect on the direction of AP Moeller i.e., AP Moeller and Mitsui OSK go up and down completely randomly.

Pair Corralation between AP Moeller and Mitsui OSK

Assuming the 90 days horizon AP Moeller Maersk AS is expected to generate 1.81 times more return on investment than Mitsui OSK. However, AP Moeller is 1.81 times more volatile than Mitsui OSK Lines. It trades about 0.12 of its potential returns per unit of risk. Mitsui OSK Lines is currently generating about 0.22 per unit of risk. If you would invest  754.00  in AP Moeller Maersk AS on August 27, 2024 and sell it today you would earn a total of  59.00  from holding AP Moeller Maersk AS or generate 7.82% return on investment over 90 days.

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

AP Moeller Maersk AS  vs.  Mitsui OSK Lines

AP Moeller Maersk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, AP Moeller may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Mitsui OSK Lines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui OSK Lines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Mitsui OSK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AP Moeller and Mitsui OSK

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

The idea behind AP Moeller Maersk AS and Mitsui OSK Lines 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.