Correlation Between Orsted AS and Green Impact

Can any of the company-specific risk be diversified away by investing in both Orsted AS and Green Impact 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 Green Impact 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 Green Impact Partners, you can compare the effects of market volatilities on Orsted AS and Green Impact 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 Green Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted AS and Green Impact.

Diversification Opportunities for Orsted AS and Green Impact

0.69

Correlation Coefficient

Orsted AS  Green Impact

Poor diversification

The 3 months correlation between Orsted and Green is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS ADR and Green Impact Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Impact Partners 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 ADR are associated (or correlated) with Green Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Impact Partners has no effect on the direction of Orsted AS i.e., Orsted AS and Green Impact go up and down completely randomly.

Pair Corralation between Orsted AS and Green Impact

Assuming the 90 days horizon Orsted AS ADR is expected to under-perform the Green Impact. In addition to that, Orsted AS is 1.08 times more volatile than Green Impact Partners. It trades about -0.17 of its total potential returns per unit of risk. Green Impact Partners is currently generating about 0.01 per unit of volatility. If you would invest  230.00  in Green Impact Partners on September 15, 2024 and sell it today you would lose (1.00) from holding Green Impact Partners or give up 0.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Orsted AS ADR  vs.  Green Impact Partners

Orsted AS ADR

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Green Impact Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Orsted AS and Green Impact

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

The idea behind Orsted AS ADR and Green Impact Partners 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.