Correlation Between ENSTAR GROUP and Unipol Gruppo

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

Diversification Opportunities for ENSTAR GROUP and Unipol Gruppo

0.76

Correlation Coefficient

ENSTAR GROUP  Unipol Gruppo

Poor diversification

The 3 months correlation between ENSTAR and Unipol is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ENSTAR GROUP LTD and Unipol Gruppo Finanziario in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unipol Gruppo Finanziario 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 Unipol Gruppo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unipol Gruppo Finanziario has no effect on the direction of ENSTAR GROUP i.e., ENSTAR GROUP and Unipol Gruppo go up and down completely randomly.

Pair Corralation between ENSTAR GROUP and Unipol Gruppo

Assuming the 90 days horizon ENSTAR GROUP is expected to generate 2.02 times less return on investment than Unipol Gruppo. But when comparing it to its historical volatility, ENSTAR GROUP LTD is 2.42 times less risky than Unipol Gruppo. It trades about 0.14 of its potential returns per unit of risk. Unipol Gruppo Finanziario is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,028  in Unipol Gruppo Finanziario on September 23, 2024 and sell it today you would earn a total of  128.00  from holding Unipol Gruppo Finanziario or generate 12.45% return on investment over 90 days.

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

ENSTAR GROUP LTD  vs.  Unipol Gruppo Finanziario

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.

Unipol Gruppo Finanziario

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unipol Gruppo Finanziario are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Unipol Gruppo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ENSTAR GROUP and Unipol Gruppo

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

The idea behind ENSTAR GROUP LTD and Unipol Gruppo Finanziario 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.