Correlation Between Netcompany Group and Vestas Wind

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

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

Diversification Opportunities for Netcompany Group and Vestas Wind

-0.86

Correlation Coefficient

Netcompany Group  Vestas Wind

Pay attention - limited upside

The 3 months correlation between Netcompany and Vestas is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Netcompany Group AS 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 Netcompany Group 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 Netcompany Group AS 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 Netcompany Group i.e., Netcompany Group and Vestas Wind go up and down completely randomly.

Pair Corralation between Netcompany Group and Vestas Wind

Assuming the 90 days trading horizon Netcompany Group AS is expected to generate 0.68 times more return on investment than Vestas Wind. However, Netcompany Group AS is 1.48 times less risky than Vestas Wind. It trades about 0.05 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.12 per unit of risk. If you would invest  30,300  in Netcompany Group AS on September 25, 2024 and sell it today you would earn a total of  3,240  from holding Netcompany Group AS or generate 10.69% return on investment over 90 days.

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

Netcompany Group AS  vs.  Vestas Wind Systems

Netcompany Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netcompany Group AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Netcompany Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Netcompany Group and Vestas Wind

The main advantage of trading using opposite Netcompany Group and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netcompany Group 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 Netcompany Group AS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.