Correlation Between ENSTAR GROUP and VITEC SOFTWARE

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

By analyzing existing cross correlation between ENSTAR GROUP LTD and VITEC SOFTWARE GROUP, you can compare the effects of market volatilities on ENSTAR GROUP and VITEC SOFTWARE 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 ENSTAR GROUP with a short position of VITEC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENSTAR GROUP and VITEC SOFTWARE.

Diversification Opportunities for ENSTAR GROUP and VITEC SOFTWARE

-0.37

Correlation Coefficient

ENSTAR GROUP  VITEC SOFTWARE

Very good diversification

The 3 months correlation between ENSTAR and VITEC is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ENSTAR GROUP LTD and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP and ENSTAR GROUP 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 ENSTAR GROUP LTD are associated (or correlated) with VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of ENSTAR GROUP i.e., ENSTAR GROUP and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between ENSTAR GROUP and VITEC SOFTWARE

Assuming the 90 days horizon ENSTAR GROUP is expected to generate 22.24 times less return on investment than VITEC SOFTWARE. But when comparing it to its historical volatility, ENSTAR GROUP LTD is 2.99 times less risky than VITEC SOFTWARE. It trades about 0.06 of its potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  3,974  in VITEC SOFTWARE GROUP on September 26, 2024 and sell it today you would earn a total of  648.00  from holding VITEC SOFTWARE GROUP or generate 16.31% return on investment over 90 days.

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

ENSTAR GROUP LTD  vs.  VITEC SOFTWARE GROUP

ENSTAR GROUP LTD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENSTAR GROUP LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ENSTAR GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VITEC SOFTWARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ENSTAR GROUP and VITEC SOFTWARE

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

The idea behind ENSTAR GROUP LTD and VITEC SOFTWARE GROUP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.