Correlation Between Orsted A/S and Spark Power
Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Spark Power 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 Spark Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Spark Power Group, you can compare the effects of market volatilities on Orsted A/S and Spark Power 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 Spark Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Spark Power.
Diversification Opportunities for Orsted A/S and Spark Power
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orsted and Spark is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Spark Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spark Power Group 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 Spark Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spark Power Group has no effect on the direction of Orsted A/S i.e., Orsted A/S and Spark Power go up and down completely randomly.
Pair Corralation between Orsted A/S and Spark Power
Assuming the 90 days horizon Orsted AS is expected to under-perform the Spark Power. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orsted AS is 25.76 times less risky than Spark Power. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Spark Power Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Spark Power Group on August 31, 2024 and sell it today you would lose (9.00) from holding Spark Power Group or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 28.24% |
| Values | Daily Returns |
Orsted AS vs. Spark Power Group
Performance |
| Timeline |
| Orsted A/S |
| Spark Power Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Orsted A/S and Spark Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted A/S and Spark Power
The main advantage of trading using opposite Orsted A/S and Spark Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted A/S position performs unexpectedly, Spark Power 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 Spark Power will offset losses from the drop in Spark Power's long position.| Orsted A/S vs. Constellation Energy Corp | Orsted A/S vs. Orsted AS ADR | Orsted A/S vs. HUMANA INC | Orsted A/S vs. Aquagold 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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