Correlation Between Rolling Optics and Arise Windpower

Can any of the company-specific risk be diversified away by investing in both Rolling Optics and Arise Windpower 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 Rolling Optics and Arise Windpower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rolling Optics Holding and Arise Windpower AB, you can compare the effects of market volatilities on Rolling Optics and Arise Windpower 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 Rolling Optics with a short position of Arise Windpower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rolling Optics and Arise Windpower.

Diversification Opportunities for Rolling Optics and Arise Windpower

0.36

Correlation Coefficient

Rolling Optics  Arise Windpower

Weak diversification

The 3 months correlation between Rolling and Arise is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Rolling Optics Holding and Arise Windpower AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arise Windpower AB and Rolling Optics 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 Rolling Optics Holding are associated (or correlated) with Arise Windpower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arise Windpower AB has no effect on the direction of Rolling Optics i.e., Rolling Optics and Arise Windpower go up and down completely randomly.

Pair Corralation between Rolling Optics and Arise Windpower

Assuming the 90 days horizon Rolling Optics Holding is expected to under-perform the Arise Windpower. In addition to that, Rolling Optics is 5.51 times more volatile than Arise Windpower AB. It trades about -0.03 of its total potential returns per unit of risk. Arise Windpower AB is currently generating about -0.04 per unit of volatility. If you would invest  3,675  in Arise Windpower AB on December 30, 2024 and sell it today you would lose (175.00) from holding Arise Windpower AB or give up 4.76% of portfolio value over 90 days.

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

Rolling Optics Holding  vs.  Arise Windpower AB

Rolling Optics Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rolling Optics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Arise Windpower AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arise Windpower AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arise Windpower is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rolling Optics and Arise Windpower

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

The idea behind Rolling Optics Holding and Arise Windpower AB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.