Correlation Between Orsted A/S and VirExit Technologies

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

Diversification Opportunities for Orsted A/S and VirExit Technologies

0.68

Correlation Coefficient

Orsted A/S  VirExit Technologies

Poor diversification

The 3 months correlation between Orsted and VirExit is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS ADR and VirExit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirExit 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 VirExit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirExit Technologies has no effect on the direction of Orsted A/S i.e., Orsted A/S and VirExit Technologies go up and down completely randomly.

Pair Corralation between Orsted A/S and VirExit Technologies

Assuming the 90 days horizon Orsted AS ADR is expected to generate 0.27 times more return on investment than VirExit Technologies. However, Orsted AS ADR is 3.74 times less risky than VirExit Technologies. It trades about -0.07 of its potential returns per unit of risk. VirExit Technologies is currently generating about -0.16 per unit of risk. If you would invest  2,049  in Orsted AS ADR on September 4, 2024 and sell it today you would lose (202.00) from holding Orsted AS ADR or give up 9.86% of portfolio value over 90 days.

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

Orsted AS ADR  vs.  VirExit Technologies

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 latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

VirExit Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VirExit Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Orsted A/S and VirExit Technologies

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

The idea behind Orsted AS ADR and VirExit Technologies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.