Correlation Between CGN Power and Orsted AS
Can any of the company-specific risk be diversified away by investing in both CGN Power and Orsted AS 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 CGN Power and Orsted AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGN Power Co and Orsted AS, you can compare the effects of market volatilities on CGN Power and Orsted AS 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 CGN Power with a short position of Orsted AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGN Power and Orsted AS.
Diversification Opportunities for CGN Power and Orsted AS
Very good diversification
The 3 months correlation between CGN and Orsted is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CGN Power Co and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS and CGN Power 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 CGN Power Co are associated (or correlated) with Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of CGN Power i.e., CGN Power and Orsted AS go up and down completely randomly.
Pair Corralation between CGN Power and Orsted AS
Assuming the 90 days horizon CGN Power Co is expected to generate 5.52 times more return on investment than Orsted AS. However, CGN Power is 5.52 times more volatile than Orsted AS. It trades about 0.06 of its potential returns per unit of risk. Orsted AS is currently generating about -0.05 per unit of risk. If you would invest 26.00 in CGN Power Co on October 13, 2024 and sell it today you would earn a total of 2.00 from holding CGN Power Co or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CGN Power Co vs. Orsted AS
Performance |
| Timeline |
| CGN Power |
| Orsted AS |
CGN Power and Orsted AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGN Power and Orsted AS
The main advantage of trading using opposite CGN Power and Orsted AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGN Power position performs unexpectedly, Orsted AS 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 Orsted AS will offset losses from the drop in Orsted AS's long position.| CGN Power vs. Calibre Mining Corp | CGN Power vs. CARDINAL HEALTH | CGN Power vs. Acadia Healthcare | CGN Power vs. De Grey Mining |
| Orsted AS vs. DELTA AIR LINES | Orsted AS vs. Casio Computer CoLtd | Orsted AS vs. Highlight Communications AG | Orsted AS vs. SOGECLAIR SA INH |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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