Correlation Between Orsted A/S and Kansai Electric
Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Kansai Electric 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 A/S and Kansai Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Kansai Electric Power, you can compare the effects of market volatilities on Orsted A/S and Kansai Electric 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 A/S with a short position of Kansai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Kansai Electric.
Diversification Opportunities for Orsted A/S and Kansai Electric
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orsted and Kansai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Kansai Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansai Electric Power and Orsted A/S 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 Kansai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansai Electric Power has no effect on the direction of Orsted A/S i.e., Orsted A/S and Kansai Electric go up and down completely randomly.
Pair Corralation between Orsted A/S and Kansai Electric
Assuming the 90 days horizon Orsted AS is expected to under-perform the Kansai Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orsted AS is 1.43 times less risky than Kansai Electric. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Kansai Electric Power is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Kansai Electric Power on November 4, 2024 and sell it today you would earn a total of 62.00 from holding Kansai Electric Power or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Kansai Electric Power
Performance |
| Timeline |
| Orsted A/S |
| Kansai Electric Power |
Orsted A/S and Kansai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted A/S and Kansai Electric
The main advantage of trading using opposite Orsted A/S and Kansai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted A/S position performs unexpectedly, Kansai Electric 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 Kansai Electric will offset losses from the drop in Kansai Electric's long position.| Orsted A/S vs. Innergex Renewable Energy | Orsted A/S vs. Clearway Energy | Orsted A/S vs. Fusion Fuel Green | Orsted A/S vs. Powertap Hydrogen Capital |
| Kansai Electric vs. Wind Works Power | Kansai Electric vs. Alternus Energy Group | Kansai Electric vs. Mass Megawat Wind | Kansai Electric vs. Enlight Renewable Energy |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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