Correlation Between Arise Windpower and Eolus Vind

Can any of the company-specific risk be diversified away by investing in both Arise Windpower and Eolus Vind 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 Arise Windpower and Eolus Vind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arise Windpower AB and Eolus Vind AB, you can compare the effects of market volatilities on Arise Windpower and Eolus Vind 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 Arise Windpower with a short position of Eolus Vind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arise Windpower and Eolus Vind.

Diversification Opportunities for Arise Windpower and Eolus Vind

0.18

Correlation Coefficient

Arise Windpower  Eolus Vind

Average diversification

The 3 months correlation between Arise and Eolus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Arise Windpower AB and Eolus Vind AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eolus Vind AB and Arise Windpower 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 Arise Windpower AB are associated (or correlated) with Eolus Vind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eolus Vind AB has no effect on the direction of Arise Windpower i.e., Arise Windpower and Eolus Vind go up and down completely randomly.

Pair Corralation between Arise Windpower and Eolus Vind

Assuming the 90 days trading horizon Arise Windpower AB is expected to under-perform the Eolus Vind. But the stock apears to be less risky and, when comparing its historical volatility, Arise Windpower AB is 1.19 times less risky than Eolus Vind. The stock trades about -0.09 of its potential returns per unit of risk. The Eolus Vind AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,805  in Eolus Vind AB on September 12, 2024 and sell it today you would earn a total of  315.00  from holding Eolus Vind AB or generate 6.56% return on investment over 90 days.

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

Arise Windpower AB  vs.  Eolus Vind AB

Arise Windpower AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arise Windpower AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Eolus Vind AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eolus Vind AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Eolus Vind may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arise Windpower and Eolus Vind

The main advantage of trading using opposite Arise Windpower and Eolus Vind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arise Windpower position performs unexpectedly, Eolus Vind 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 Eolus Vind will offset losses from the drop in Eolus Vind's long position.

The idea behind Arise Windpower AB and Eolus Vind AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.