Correlation Between Accent Resources and Vestas Wind

Can any of the company-specific risk be diversified away by investing in both Accent Resources 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 Accent Resources and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accent Resources NL and Vestas Wind Systems, you can compare the effects of market volatilities on Accent Resources 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 Accent Resources with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accent Resources and Vestas Wind.

Diversification Opportunities for Accent Resources and Vestas Wind

-0.1

Correlation Coefficient

Accent Resources  Vestas Wind

Good diversification

The 3 months correlation between Accent and Vestas is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Accent Resources NL 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 Accent Resources 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 Accent Resources NL 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 Accent Resources i.e., Accent Resources and Vestas Wind go up and down completely randomly.

Pair Corralation between Accent Resources and Vestas Wind

Assuming the 90 days horizon Accent Resources is expected to generate 5.42 times less return on investment than Vestas Wind. But when comparing it to its historical volatility, Accent Resources NL is 1.8 times less risky than Vestas Wind. It trades about 0.01 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,331  in Vestas Wind Systems on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Vestas Wind Systems or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Accent Resources NL  vs.  Vestas Wind Systems

Accent Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accent Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Accent Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vestas Wind Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vestas Wind Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Vestas Wind is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Accent Resources and Vestas Wind

The main advantage of trading using opposite Accent Resources and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accent Resources 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.

The idea behind Accent Resources NL and Vestas Wind Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.