Correlation Between Amoeba SA and Energisme

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

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

Diversification Opportunities for Amoeba SA and Energisme

-0.28

Correlation Coefficient

Amoeba SA  Energisme

Very good diversification

The 3 months correlation between Amoeba and Energisme is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amoeba SA and Energisme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisme and Amoeba SA 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 Amoeba SA are associated (or correlated) with Energisme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisme has no effect on the direction of Amoeba SA i.e., Amoeba SA and Energisme go up and down completely randomly.

Pair Corralation between Amoeba SA and Energisme

Assuming the 90 days trading horizon Amoeba SA is expected to generate 1.52 times more return on investment than Energisme. However, Amoeba SA is 1.52 times more volatile than Energisme. It trades about 0.14 of its potential returns per unit of risk. Energisme is currently generating about -0.09 per unit of risk. If you would invest  79.00  in Amoeba SA on September 25, 2024 and sell it today you would earn a total of  11.00  from holding Amoeba SA or generate 13.92% return on investment over 90 days.

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

Amoeba SA  vs.  Energisme

Amoeba SA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amoeba SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Amoeba SA reported solid returns over the last few months and may actually be approaching a breakup point.

Energisme

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisme are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Energisme is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Amoeba SA and Energisme

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

The idea behind Amoeba SA and Energisme 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.