Correlation Between Orsted AS and Scatec Solar

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

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

Diversification Opportunities for Orsted AS and Scatec Solar

0.57

Correlation Coefficient

Orsted AS  Scatec Solar

Very weak diversification

The 3 months correlation between Orsted and Scatec is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Scatec Solar OL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scatec Solar OL 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 Scatec Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scatec Solar OL has no effect on the direction of Orsted AS i.e., Orsted AS and Scatec Solar go up and down completely randomly.

Pair Corralation between Orsted AS and Scatec Solar

Assuming the 90 days trading horizon Orsted AS is expected to generate 1.34 times less return on investment than Scatec Solar. In addition to that, Orsted AS is 2.26 times more volatile than Scatec Solar OL. It trades about 0.11 of its total potential returns per unit of risk. Scatec Solar OL is currently generating about 0.34 per unit of volatility. If you would invest  7,855  in Scatec Solar OL on April 24, 2025 and sell it today you would earn a total of  2,435  from holding Scatec Solar OL or generate 31.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Orsted AS  vs.  Scatec Solar OL

Orsted AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orsted AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Orsted AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Scatec Solar OL

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Scatec Solar OL are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Scatec Solar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orsted AS and Scatec Solar

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

The idea behind Orsted AS and Scatec Solar OL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.