Correlation Between Orsted AS and Danske Invest

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

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

Diversification Opportunities for Orsted AS and Danske Invest

-0.57

Correlation Coefficient

Orsted AS  Danske Invest

Excellent diversification

The 3 months correlation between Orsted and Danske is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Danske Invest Mix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest Mix 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 Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest Mix has no effect on the direction of Orsted AS i.e., Orsted AS and Danske Invest go up and down completely randomly.

Pair Corralation between Orsted AS and Danske Invest

Assuming the 90 days trading horizon Orsted AS is expected to under-perform the Danske Invest. In addition to that, Orsted AS is 12.6 times more volatile than Danske Invest Mix. It trades about -0.16 of its total potential returns per unit of risk. Danske Invest Mix is currently generating about 0.11 per unit of volatility. If you would invest  13,874  in Danske Invest Mix on October 8, 2024 and sell it today you would earn a total of  175.00  from holding Danske Invest Mix or generate 1.26% return on investment over 90 days.

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

Orsted AS  vs.  Danske Invest Mix

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 unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Danske Invest Mix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest Mix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Danske Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orsted AS and Danske Invest

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

The idea behind Orsted AS and Danske Invest Mix 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.