Correlation Between AP Mller and PFA Invest

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

By analyzing existing cross correlation between AP Mller and PFA Invest Kreditobligationer, you can compare the effects of market volatilities on AP Mller and PFA Invest 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 PFA Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and PFA Invest.

Diversification Opportunities for AP Mller and PFA Invest

0.7

Correlation Coefficient

AP Mller  PFA Invest

Poor diversification

The 3 months correlation between MAERSK-A and PFA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and PFA Invest Kreditobligationer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFA Invest Kreditobl 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 PFA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFA Invest Kreditobl has no effect on the direction of AP Mller i.e., AP Mller and PFA Invest go up and down completely randomly.

Pair Corralation between AP Mller and PFA Invest

Assuming the 90 days trading horizon AP Mller is expected to under-perform the PFA Invest. In addition to that, AP Mller is 15.81 times more volatile than PFA Invest Kreditobligationer. It trades about -0.14 of its total potential returns per unit of risk. PFA Invest Kreditobligationer is currently generating about 0.43 per unit of volatility. If you would invest  10,729  in PFA Invest Kreditobligationer on March 26, 2025 and sell it today you would earn a total of  103.00  from holding PFA Invest Kreditobligationer or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

AP Mller   vs.  PFA Invest Kreditobligationer

AP Mller

Risk-Adjusted Performance

Very Weak

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

PFA Invest Kreditobl

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PFA Invest Kreditobligationer are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, PFA Invest 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 Mller and PFA Invest

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

The idea behind AP Mller and PFA Invest Kreditobligationer 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.