Correlation Between Orsted AS and Royal Unibrew

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

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

Diversification Opportunities for Orsted AS and Royal Unibrew

0.77

Correlation Coefficient

Orsted AS  Royal Unibrew

Poor diversification

The 3 months correlation between Orsted and Royal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Royal Unibrew AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Unibrew 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 Royal Unibrew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Unibrew AS has no effect on the direction of Orsted AS i.e., Orsted AS and Royal Unibrew go up and down completely randomly.

Pair Corralation between Orsted AS and Royal Unibrew

Assuming the 90 days trading horizon Orsted AS is expected to under-perform the Royal Unibrew. In addition to that, Orsted AS is 1.72 times more volatile than Royal Unibrew AS. It trades about -0.14 of its total potential returns per unit of risk. Royal Unibrew AS is currently generating about -0.08 per unit of volatility. If you would invest  56,700  in Royal Unibrew AS on September 15, 2024 and sell it today you would lose (4,200) from holding Royal Unibrew AS or give up 7.41% of portfolio value over 90 days.

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

Orsted AS  vs.  Royal Unibrew AS

Orsted AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Royal Unibrew AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Unibrew 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 Royal Unibrew

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

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