Correlation Between Orsted AS and Maj Invest

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

Diversification Opportunities for Orsted AS and Maj Invest

0.02

Correlation Coefficient

Orsted AS  Maj Invest

Significant diversification

The 3 months correlation between Orsted and Maj is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Maj Invest Pension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest Pension 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 Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest Pension has no effect on the direction of Orsted AS i.e., Orsted AS and Maj Invest go up and down completely randomly.

Pair Corralation between Orsted AS and Maj Invest

Assuming the 90 days trading horizon Orsted AS is expected to generate 1.84 times more return on investment than Maj Invest. However, Orsted AS is 1.84 times more volatile than Maj Invest Pension. It trades about -0.01 of its potential returns per unit of risk. Maj Invest Pension is currently generating about -0.13 per unit of risk. If you would invest  32,420  in Orsted AS on December 30, 2024 and sell it today you would lose (1,340) from holding Orsted AS or give up 4.13% of portfolio value over 90 days.

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

Orsted AS  vs.  Maj Invest Pension

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

Maj Invest Pension

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maj Invest Pension has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Orsted AS and Maj Invest

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

The idea behind Orsted AS and Maj Invest Pension 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..