Correlation Between Cessatech and Orsted AS

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

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

Diversification Opportunities for Cessatech and Orsted AS

0.21

Correlation Coefficient

Cessatech  Orsted AS

Modest diversification

The 3 months correlation between Cessatech and Orsted is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cessatech AS and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS and Cessatech 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 Cessatech AS are associated (or correlated) with Orsted AS. 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 has no effect on the direction of Cessatech i.e., Cessatech and Orsted AS go up and down completely randomly.

Pair Corralation between Cessatech and Orsted AS

Assuming the 90 days trading horizon Cessatech AS is expected to under-perform the Orsted AS. In addition to that, Cessatech is 1.64 times more volatile than Orsted AS. It trades about -0.04 of its total potential returns per unit of risk. Orsted AS is currently generating about 0.0 per unit of volatility. If you would invest  39,840  in Orsted AS on September 3, 2024 and sell it today you would lose (660.00) from holding Orsted AS or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	33.85%
Values	Daily Returns

Cessatech AS  vs.  Orsted AS

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Orsted AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Orsted AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cessatech and Orsted AS

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

The idea behind Cessatech AS and Orsted AS 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.