Correlation Between Fortum Oyj and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Orsted A/S 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 Fortum Oyj and Orsted A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj ADR and Orsted AS ADR, you can compare the effects of market volatilities on Fortum Oyj and Orsted A/S 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 Fortum Oyj with a short position of Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Orsted A/S.
Diversification Opportunities for Fortum Oyj and Orsted A/S
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fortum and Orsted is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj ADR and Orsted AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS ADR and Fortum Oyj 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 Fortum Oyj ADR are associated (or correlated) with Orsted A/S. 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 ADR has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Orsted A/S go up and down completely randomly.
Pair Corralation between Fortum Oyj and Orsted A/S
Assuming the 90 days horizon Fortum Oyj ADR is expected to generate 0.75 times more return on investment than Orsted A/S. However, Fortum Oyj ADR is 1.34 times less risky than Orsted A/S. It trades about 0.03 of its potential returns per unit of risk. Orsted AS ADR is currently generating about -0.3 per unit of risk. If you would invest 287.00 in Fortum Oyj ADR on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Fortum Oyj ADR or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj ADR vs. Orsted AS ADR
Performance |
| Timeline |
| Fortum Oyj ADR |
| Orsted AS ADR |
Fortum Oyj and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Orsted A/S
The main advantage of trading using opposite Fortum Oyj and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Orsted A/S 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 A/S will offset losses from the drop in Orsted A/S's long position.| Fortum Oyj vs. Constellation Energy Corp | Fortum Oyj vs. Astra Energy | Fortum Oyj vs. Powertap Hydrogen Capital | Fortum Oyj vs. Brenmiller Energy Ltd |
| Orsted A/S vs. Brookfield Renewable Partners | Orsted A/S vs. Brookfield Renewable Corp | Orsted A/S vs. Clearway Energy Class | Orsted A/S vs. Nextera Energy Partners |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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