Correlation Between ENSTAR GROUP and ASSGENERALI ADR

Can any of the company-specific risk be diversified away by investing in both ENSTAR GROUP and ASSGENERALI ADR 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 ASSGENERALI ADR 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 ASSGENERALI ADR 12EO, you can compare the effects of market volatilities on ENSTAR GROUP and ASSGENERALI ADR 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 ASSGENERALI ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENSTAR GROUP and ASSGENERALI ADR.

Diversification Opportunities for ENSTAR GROUP and ASSGENERALI ADR

0.4

Correlation Coefficient

ENSTAR GROUP  ASSGENERALI ADR

Very weak diversification

The 3 months correlation between ENSTAR and ASSGENERALI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ENSTAR GROUP LTD and ASSGENERALI ADR 12EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSGENERALI ADR 12EO 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 ASSGENERALI ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSGENERALI ADR 12EO has no effect on the direction of ENSTAR GROUP i.e., ENSTAR GROUP and ASSGENERALI ADR go up and down completely randomly.

Pair Corralation between ENSTAR GROUP and ASSGENERALI ADR

Assuming the 90 days horizon ENSTAR GROUP LTD is expected to generate 0.45 times more return on investment than ASSGENERALI ADR. However, ENSTAR GROUP LTD is 2.24 times less risky than ASSGENERALI ADR. It trades about 0.14 of its potential returns per unit of risk. ASSGENERALI ADR 12EO is currently generating about 0.05 per unit of risk. If you would invest  28,600  in ENSTAR GROUP LTD on September 23, 2024 and sell it today you would earn a total of  1,800  from holding ENSTAR GROUP LTD or generate 6.29% return on investment over 90 days.

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

ENSTAR GROUP LTD  vs.  ASSGENERALI ADR 12EO

ENSTAR GROUP LTD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENSTAR GROUP LTD are ranked lower than 11 (%) 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.

ASSGENERALI ADR 12EO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASSGENERALI ADR 12EO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, ASSGENERALI ADR 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 ASSGENERALI ADR

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

The idea behind ENSTAR GROUP LTD and ASSGENERALI ADR 12EO 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.

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 the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.