Correlation Between Orsted ADR and China Longyuan

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

Specify exactly 2 symbols:

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

Diversification Opportunities for Orsted ADR and China Longyuan

-0.56
  Correlation Coefficient
Orsted ADR
China Longyuan Power

Excellent diversification

The 3 months correlation between Orsted and China is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Orsted ADR and China Longyuan Power in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on China Longyuan Power and Orsted ADR 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 ADR are associated (or correlated) with China Longyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Longyuan Power has no effect on the direction of Orsted ADR i.e., Orsted ADR and China Longyuan go up and down completely randomly.

Pair Corralation between Orsted ADR and China Longyuan

Assuming the 90 days horizon Orsted ADR is expected to under-perform the China Longyuan. But the otc stock apears to be less risky and, when comparing its historical volatility, Orsted ADR is 2.53 times less risky than China Longyuan. The otc stock trades about -0.03 of its potential returns per unit of risk. The China Longyuan Power is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,058  in China Longyuan Power on July 19, 2021 and sell it today you would earn a total of  31.00  from holding China Longyuan Power or generate 1.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Orsted ADR  vs.  China Longyuan Power

 Performance (%) 
      Timeline 
Orsted ADR 
 Orsted Performance
0 of 100
Over the last 90 days Orsted ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Orsted ADR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Orsted Price Channel

China Longyuan Power 
 China Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in China Longyuan Power are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, China Longyuan showed solid returns over the last few months and may actually be approaching a breakup point.

China Price Channel

Orsted ADR and China Longyuan Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Orsted ADR and China Longyuan

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

China Longyuan Power

Pair trading matchups for China Longyuan

Check out your portfolio center. 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go