Correlation Between Vestas Wind and Cessatech

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

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

Diversification Opportunities for Vestas Wind and Cessatech

-0.52

Correlation Coefficient

Vestas Wind  Cessatech

Excellent diversification

The 3 months correlation between Vestas and Cessatech is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Cessatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cessatech AS and Vestas Wind 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 Vestas Wind Systems 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 Vestas Wind i.e., Vestas Wind and Cessatech go up and down completely randomly.

Pair Corralation between Vestas Wind and Cessatech

Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Cessatech. But the stock apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 1.16 times less risky than Cessatech. The stock trades about -0.18 of its potential returns per unit of risk. The Cessatech AS is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,440  in Cessatech AS on September 12, 2024 and sell it today you would lose (210.00) from holding Cessatech AS or give up 14.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	43.75%
Values	Daily Returns

Vestas Wind Systems  vs.  Cessatech AS

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.

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Vestas Wind and Cessatech

The main advantage of trading using opposite Vestas Wind and Cessatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind 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 Vestas Wind Systems 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.