Correlation Between Hydract AS and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Hydract AS and Vestas Wind 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 Hydract AS and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydract AS and Vestas Wind Systems, you can compare the effects of market volatilities on Hydract AS and Vestas Wind 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 Hydract AS with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydract AS and Vestas Wind.
Diversification Opportunities for Hydract AS and Vestas Wind
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hydract and Vestas is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hydract AS and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and Hydract 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 Hydract AS are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Hydract AS i.e., Hydract AS and Vestas Wind go up and down completely randomly.
Pair Corralation between Hydract AS and Vestas Wind
Assuming the 90 days trading horizon Hydract AS is expected to generate 4.19 times more return on investment than Vestas Wind. However, Hydract AS is 4.19 times more volatile than Vestas Wind Systems. It trades about 0.12 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.16 per unit of risk. If you would invest 25.00 in Hydract AS on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Hydract AS or generate 32.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydract AS vs. Vestas Wind Systems
Performance |
| Timeline |
| Hydract AS |
| Vestas Wind Systems |
Hydract AS and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydract AS and Vestas Wind
The main advantage of trading using opposite Hydract AS and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydract AS position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| Hydract AS vs. Skjern Bank AS | Hydract AS vs. Nordinvestments AS | Hydract AS vs. PARKEN Sport Entertainment | Hydract AS vs. Kreditbanken AS |
| Vestas Wind vs. Genmab AS | Vestas Wind vs. Danske Bank AS | Vestas Wind vs. Ambu AS | Vestas Wind vs. Bavarian Nordic |
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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