Correlation Between Vestas Wind and Mdundo

Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Mdundo 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 Mdundo 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 Mdundo Com As, you can compare the effects of market volatilities on Vestas Wind and Mdundo 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 Mdundo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Mdundo.

Diversification Opportunities for Vestas Wind and Mdundo

0.81

Correlation Coefficient

Vestas Wind  Mdundo

Very poor diversification

The 3 months correlation between Vestas and Mdundo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Mdundo Com As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mdundo Com 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 Mdundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mdundo Com As has no effect on the direction of Vestas Wind i.e., Vestas Wind and Mdundo go up and down completely randomly.

Pair Corralation between Vestas Wind and Mdundo

Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Mdundo. But the stock apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 1.11 times less risky than Mdundo. The stock trades about -0.15 of its potential returns per unit of risk. The Mdundo Com As is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  630.00  in Mdundo Com As on October 4, 2024 and sell it today you would lose (85.00) from holding Mdundo Com As or give up 13.49% of portfolio value over 90 days.

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

Vestas Wind Systems  vs.  Mdundo Com As

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mdundo Com As

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mdundo Com As has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic 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 Vestas Wind and Mdundo

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

The idea behind Vestas Wind Systems and Mdundo Com 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.