Correlation Between Orsted A/S and Advent Technologies

Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Advent Technologies 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 A/S and Advent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orsted AS ADR and Advent Technologies Holdings, you can compare the effects of market volatilities on Orsted A/S and Advent Technologies 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 A/S with a short position of Advent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Advent Technologies.

Diversification Opportunities for Orsted A/S and Advent Technologies

-0.69

Correlation Coefficient

Orsted A/S  Advent Technologies

Excellent diversification

The 3 months correlation between Orsted and Advent is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS ADR and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies and Orsted A/S 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 ADR are associated (or correlated) with Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Orsted A/S i.e., Orsted A/S and Advent Technologies go up and down completely randomly.

Pair Corralation between Orsted A/S and Advent Technologies

Assuming the 90 days horizon Orsted AS ADR is expected to under-perform the Advent Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orsted AS ADR is 3.35 times less risky than Advent Technologies. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Advent Technologies Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.99  in Advent Technologies Holdings on August 31, 2024 and sell it today you would lose (0.08) from holding Advent Technologies Holdings or give up 8.08% of portfolio value over 90 days.

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

Orsted AS ADR  vs.  Advent Technologies Holdings

Orsted AS ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orsted AS ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Orsted A/S is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advent Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Technologies Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Advent Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orsted A/S and Advent Technologies

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

The idea behind Orsted AS ADR and Advent Technologies Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.