Correlation Between Vestas Wind and HELIOS TECHS

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

Diversification Opportunities for Vestas Wind and HELIOS TECHS

-0.29

Correlation Coefficient

Vestas Wind  HELIOS TECHS

Very good diversification

The 3 months correlation between Vestas and HELIOS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and HELIOS TECHS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HELIOS TECHS INC 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 HELIOS TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HELIOS TECHS INC has no effect on the direction of Vestas Wind i.e., Vestas Wind and HELIOS TECHS go up and down completely randomly.

Pair Corralation between Vestas Wind and HELIOS TECHS

Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the HELIOS TECHS. But the stock apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 1.05 times less risky than HELIOS TECHS. The stock trades about -0.05 of its potential returns per unit of risk. The HELIOS TECHS INC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,867  in HELIOS TECHS INC on October 22, 2024 and sell it today you would lose (1,607) from holding HELIOS TECHS INC or give up 27.39% of portfolio value over 90 days.

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

Vestas Wind Systems  vs.  HELIOS TECHS INC

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 fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HELIOS TECHS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HELIOS TECHS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HELIOS TECHS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vestas Wind and HELIOS TECHS

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

The idea behind Vestas Wind Systems and HELIOS TECHS INC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.