Correlation Between Orsted A/S and UGE International

Can any of the company-specific risk be diversified away by investing in both Orsted A/S and UGE International 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 UGE International 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 UGE International, you can compare the effects of market volatilities on Orsted A/S and UGE International 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 UGE International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and UGE International.

Diversification Opportunities for Orsted A/S and UGE International

0.02

Correlation Coefficient

Orsted A/S  UGE International

Significant diversification

The 3 months correlation between Orsted and UGE is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS ADR and UGE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGE International 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 UGE International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGE International has no effect on the direction of Orsted A/S i.e., Orsted A/S and UGE International go up and down completely randomly.

Pair Corralation between Orsted A/S and UGE International

If you would invest  146.00  in UGE International on September 1, 2024 and sell it today you would earn a total of  0.00  from holding UGE International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Orsted AS ADR  vs.  UGE International

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.

UGE International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Orsted A/S and UGE International

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

The idea behind Orsted AS ADR and UGE International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..