Correlation Between Orsted AS and Nordea Invest

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

Diversification Opportunities for Orsted AS and Nordea Invest

-0.84

Correlation Coefficient

Orsted AS  Nordea Invest

Pay attention - limited upside

The 3 months correlation between Orsted and Nordea is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Nordea Invest Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Invest Global 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 Nordea Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Invest Global has no effect on the direction of Orsted AS i.e., Orsted AS and Nordea Invest go up and down completely randomly.

Pair Corralation between Orsted AS and Nordea Invest

Assuming the 90 days trading horizon Orsted AS is expected to generate 1.86 times more return on investment than Nordea Invest. However, Orsted AS is 1.86 times more volatile than Nordea Invest Global. It trades about -0.01 of its potential returns per unit of risk. Nordea Invest Global is currently generating about -0.17 per unit of risk. If you would invest  33,030  in Orsted AS on December 25, 2024 and sell it today you would lose (1,300) from holding Orsted AS or give up 3.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	80.0%
Values	Daily Returns

Orsted AS  vs.  Nordea Invest Global

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.

Nordea Invest Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordea Invest Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Orsted AS and Nordea Invest

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

The idea behind Orsted AS and Nordea Invest Global 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.