Correlation Between Orsted AS and China Resources
Can any of the company-specific risk be diversified away by investing in both Orsted AS and China Resources 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 Orsted AS and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and China Resources Power, you can compare the effects of market volatilities on Orsted AS and China Resources 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 Orsted AS with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted AS and China Resources.
Diversification Opportunities for Orsted AS and China Resources
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orsted and China is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and China Resources Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Power and Orsted 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 Orsted AS are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Power has no effect on the direction of Orsted AS i.e., Orsted AS and China Resources go up and down completely randomly.
Pair Corralation between Orsted AS and China Resources
Assuming the 90 days horizon Orsted AS is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, Orsted AS is 1.23 times less risky than China Resources. The stock trades about -0.02 of its potential returns per unit of risk. The China Resources Power is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 226.00 in China Resources Power on September 26, 2024 and sell it today you would earn a total of 7.00 from holding China Resources Power or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. China Resources Power
Performance |
| Timeline |
| Orsted AS |
| China Resources Power |
Orsted AS and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted AS and China Resources
The main advantage of trading using opposite Orsted AS and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted AS position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Orsted AS vs. EDP Renovveis SA | Orsted AS vs. CGN Power Co | Orsted AS vs. Huaneng Power International | Orsted AS vs. Power Assets Holdings |
| China Resources vs. Orsted AS | China Resources vs. EDP Renovveis SA | China Resources vs. CGN Power Co | China Resources vs. Huaneng Power International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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