Correlation Between Vestas Wind and Gyldendal

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

By analyzing existing cross correlation between Vestas Wind Systems and Gyldendal AS, you can compare the effects of market volatilities on Vestas Wind and Gyldendal 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 Vestas Wind with a short position of Gyldendal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Gyldendal.

Diversification Opportunities for Vestas Wind and Gyldendal

0.13

Correlation Coefficient

Vestas Wind  Gyldendal

Average diversification

The 3 months correlation between Vestas and Gyldendal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Gyldendal AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyldendal AS and Vestas Wind 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 Vestas Wind Systems are associated (or correlated) with Gyldendal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyldendal AS has no effect on the direction of Vestas Wind i.e., Vestas Wind and Gyldendal go up and down completely randomly.

Pair Corralation between Vestas Wind and Gyldendal

Assuming the 90 days trading horizon Vestas Wind is expected to generate 3.15 times less return on investment than Gyldendal. But when comparing it to its historical volatility, Vestas Wind Systems is 1.74 times less risky than Gyldendal. It trades about 0.04 of its potential returns per unit of risk. Gyldendal AS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  136,000  in Gyldendal AS on December 25, 2024 and sell it today you would earn a total of  25,000  from holding Gyldendal AS or generate 18.38% return on investment over 90 days.

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

Vestas Wind Systems  vs.  Gyldendal AS

Vestas Wind Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestas Wind Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vestas Wind may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gyldendal AS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gyldendal AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Gyldendal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vestas Wind and Gyldendal

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

The idea behind Vestas Wind Systems and Gyldendal AS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.