Correlation Between Orsted AS and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Orsted AS and Nel ASA 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 Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Nel ASA, you can compare the effects of market volatilities on Orsted AS and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted AS and Nel ASA.
Diversification Opportunities for Orsted AS and Nel ASA
Very poor diversification
The 3 months correlation between Orsted and Nel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Orsted AS i.e., Orsted AS and Nel ASA go up and down completely randomly.
Pair Corralation between Orsted AS and Nel ASA
Assuming the 90 days trading horizon Orsted AS is expected to under-perform the Nel ASA. But the stock apears to be less risky and, when comparing its historical volatility, Orsted AS is 1.95 times less risky than Nel ASA. The stock trades about -0.27 of its potential returns per unit of risk. The Nel ASA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 286.00 in Nel ASA on November 4, 2024 and sell it today you would lose (48.00) from holding Nel ASA or give up 16.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Nel ASA
Performance |
| Timeline |
| Orsted AS |
| Nel ASA |
Orsted AS and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted AS and Nel ASA
The main advantage of trading using opposite Orsted AS and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted AS position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Orsted AS vs. Strategic Investments AS | Orsted AS vs. FOM Technologies AS | Orsted AS vs. BankInvest Value Globale | Orsted AS vs. PARKEN Sport Entertainment |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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