Correlation Between Brd Klee and Vestas Wind

Can any of the company-specific risk be diversified away by investing in both Brd Klee and Vestas Wind 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 Brd Klee and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brd Klee AS and Vestas Wind Systems, you can compare the effects of market volatilities on Brd Klee and Vestas Wind 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 Brd Klee with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brd Klee and Vestas Wind.

Diversification Opportunities for Brd Klee and Vestas Wind

0.5

Correlation Coefficient

Brd Klee  Vestas Wind

Very weak diversification

The 3 months correlation between Brd and Vestas is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Brd Klee AS and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and Brd Klee 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 Brd Klee AS are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Brd Klee i.e., Brd Klee and Vestas Wind go up and down completely randomly.

Pair Corralation between Brd Klee and Vestas Wind

Assuming the 90 days trading horizon Brd Klee AS is expected to generate 0.43 times more return on investment than Vestas Wind. However, Brd Klee AS is 2.35 times less risky than Vestas Wind. It trades about -0.05 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.21 per unit of risk. If you would invest  398,000  in Brd Klee AS on September 13, 2024 and sell it today you would lose (20,000) from holding Brd Klee AS or give up 5.03% of portfolio value over 90 days.

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

Brd Klee AS  vs.  Vestas Wind Systems

Brd Klee AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brd Klee AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Brd Klee is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brd Klee and Vestas Wind

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

The idea behind Brd Klee AS and Vestas Wind Systems 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.