Correlation Between Orsted AS and Cessatech

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

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

Diversification Opportunities for Orsted AS and Cessatech

0.21

Correlation Coefficient

Orsted AS  Cessatech

Modest diversification

The 3 months correlation between Orsted and Cessatech is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Cessatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cessatech AS and Orsted AS 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 are associated (or correlated) with Cessatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cessatech AS has no effect on the direction of Orsted AS i.e., Orsted AS and Cessatech go up and down completely randomly.

Pair Corralation between Orsted AS and Cessatech

Assuming the 90 days trading horizon Orsted AS is expected to generate 0.6 times more return on investment than Cessatech. However, Orsted AS is 1.67 times less risky than Cessatech. It trades about 0.01 of its potential returns per unit of risk. Cessatech AS is currently generating about -0.04 per unit of risk. If you would invest  39,200  in Orsted AS on September 1, 2024 and sell it today you would lose (20.00) from holding Orsted AS or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	32.31%
Values	Daily Returns

Orsted AS  vs.  Cessatech AS

Orsted AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orsted AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Orsted AS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Orsted AS and Cessatech

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

The idea behind Orsted AS and Cessatech AS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.