Correlation Between Orsted A/S and Excelerate Energy

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Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Excelerate Energy 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 A/S and Excelerate Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS ADR and Excelerate Energy, you can compare the effects of market volatilities on Orsted A/S and Excelerate Energy 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 A/S with a short position of Excelerate Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Excelerate Energy.

Diversification Opportunities for Orsted A/S and Excelerate Energy

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Orsted and Excelerate is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS ADR and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy and Orsted A/S 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 ADR are associated (or correlated) with Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of Orsted A/S i.e., Orsted A/S and Excelerate Energy go up and down completely randomly.

Pair Corralation between Orsted A/S and Excelerate Energy

Assuming the 90 days horizon Orsted AS ADR is expected to under-perform the Excelerate Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orsted AS ADR is 1.0 times less risky than Excelerate Energy. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Excelerate Energy is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,831  in Excelerate Energy on August 31, 2024 and sell it today you would earn a total of  1,238  from holding Excelerate Energy or generate 67.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Orsted AS ADR  vs.  Excelerate Energy

 Performance 
       Timeline  
Orsted AS ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orsted AS ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Orsted A/S is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Excelerate Energy 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Excelerate Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Orsted A/S and Excelerate Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orsted A/S and Excelerate Energy

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

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