Correlation Between Orsted AS and BankInv Kort

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

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

Diversification Opportunities for Orsted AS and BankInv Kort

-0.01

Correlation Coefficient

Orsted AS  BankInv Kort

Good diversification

The 3 months correlation between Orsted and BankInv is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and BankInv Kort HY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv Kort HY 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 are associated (or correlated) with BankInv Kort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv Kort HY has no effect on the direction of Orsted AS i.e., Orsted AS and BankInv Kort go up and down completely randomly.

Pair Corralation between Orsted AS and BankInv Kort

Assuming the 90 days trading horizon Orsted AS is expected to under-perform the BankInv Kort. In addition to that, Orsted AS is 10.35 times more volatile than BankInv Kort HY. It trades about -0.02 of its total potential returns per unit of risk. BankInv Kort HY is currently generating about 0.07 per unit of volatility. If you would invest  10,320  in BankInv Kort HY on December 27, 2024 and sell it today you would earn a total of  125.00  from holding BankInv Kort HY or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Orsted AS  vs.  BankInv Kort HY

Orsted AS

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to short-term losses for the investors.

BankInv Kort HY

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Orsted AS and BankInv Kort

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

The idea behind Orsted AS and BankInv Kort HY 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.