Correlation Between Amplitude and Enfusion

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

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

Diversification Opportunities for Amplitude and Enfusion

0.73

Correlation Coefficient

Amplitude  Enfusion

Poor diversification

The 3 months correlation between Amplitude and Enfusion is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amplitude and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Amplitude 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 Amplitude are associated (or correlated) with Enfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enfusion has no effect on the direction of Amplitude i.e., Amplitude and Enfusion go up and down completely randomly.

Pair Corralation between Amplitude and Enfusion

Given the investment horizon of 90 days Amplitude is expected to generate 1.07 times less return on investment than Enfusion. In addition to that, Amplitude is 1.2 times more volatile than Enfusion. It trades about 0.14 of its total potential returns per unit of risk. Enfusion is currently generating about 0.18 per unit of volatility. If you would invest  806.00  in Enfusion on August 31, 2024 and sell it today you would earn a total of  196.00  from holding Enfusion or generate 24.32% return on investment over 90 days.

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

Amplitude  vs.  Enfusion

Amplitude

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amplitude are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Amplitude disclosed solid returns over the last few months and may actually be approaching a breakup point.

Enfusion

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amplitude and Enfusion

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

The idea behind Amplitude and Enfusion 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.