Correlation Between Cadeler As and Scatec Solar
Can any of the company-specific risk be diversified away by investing in both Cadeler As and Scatec Solar 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 Cadeler As and Scatec Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadeler As and Scatec Solar OL, you can compare the effects of market volatilities on Cadeler As and Scatec Solar 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 Cadeler As with a short position of Scatec Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadeler As and Scatec Solar.
Diversification Opportunities for Cadeler As and Scatec Solar
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cadeler and Scatec is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cadeler As and Scatec Solar OL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scatec Solar OL and Cadeler As 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 Cadeler As are associated (or correlated) with Scatec Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scatec Solar OL has no effect on the direction of Cadeler As i.e., Cadeler As and Scatec Solar go up and down completely randomly.
Pair Corralation between Cadeler As and Scatec Solar
Assuming the 90 days trading horizon Cadeler As is expected to under-perform the Scatec Solar. But the stock apears to be less risky and, when comparing its historical volatility, Cadeler As is 1.29 times less risky than Scatec Solar. The stock trades about -0.25 of its potential returns per unit of risk. The Scatec Solar OL is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 8,280 in Scatec Solar OL on August 29, 2024 and sell it today you would lose (395.00) from holding Scatec Solar OL or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadeler As vs. Scatec Solar OL
Performance |
| Timeline |
| Cadeler As |
| Scatec Solar OL |
Cadeler As and Scatec Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadeler As and Scatec Solar
The main advantage of trading using opposite Cadeler As and Scatec Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadeler As position performs unexpectedly, Scatec Solar 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 Scatec Solar will offset losses from the drop in Scatec Solar's long position.The idea behind Cadeler As and Scatec Solar OL 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.| Scatec Solar vs. Aker Carbon Capture | Scatec Solar vs. Elkem ASA | Scatec Solar vs. Vow ASA | Scatec Solar vs. North Energy ASA |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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