Correlation Between PF Atlantic and Vestas Wind

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

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

Diversification Opportunities for PF Atlantic and Vestas Wind

0.3

Correlation Coefficient

PF Atlantic  Vestas Wind

Weak diversification

The 3 months correlation between ATLA-DKK and Vestas is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PF Atlantic Petroleum 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 PF Atlantic 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 PF Atlantic Petroleum 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 PF Atlantic i.e., PF Atlantic and Vestas Wind go up and down completely randomly.

Pair Corralation between PF Atlantic and Vestas Wind

Assuming the 90 days trading horizon PF Atlantic Petroleum is expected to under-perform the Vestas Wind. In addition to that, PF Atlantic is 1.74 times more volatile than Vestas Wind Systems. It trades about -0.06 of its total potential returns per unit of risk. Vestas Wind Systems is currently generating about 0.01 per unit of volatility. If you would invest  17,946  in Vestas Wind Systems on January 24, 2024 and sell it today you would earn a total of  324.00  from holding Vestas Wind Systems or generate 1.81% return on investment over 90 days.

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

PF Atlantic Petroleum  vs.  Vestas Wind Systems

PF Atlantic Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PF Atlantic Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PF Atlantic is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional 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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with PF Atlantic and Vestas Wind

The main advantage of trading using opposite PF Atlantic and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PF Atlantic 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 PF Atlantic Petroleum 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.