Correlation Between Strategic Investments and ENN Energy

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

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

Diversification Opportunities for Strategic Investments and ENN Energy

-0.55

Correlation Coefficient

Strategic Investments  ENN Energy

Excellent diversification

The 3 months correlation between Strategic and ENN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Strategic Investments i.e., Strategic Investments and ENN Energy go up and down completely randomly.

Pair Corralation between Strategic Investments and ENN Energy

Assuming the 90 days horizon Strategic Investments AS is expected to under-perform the ENN Energy. In addition to that, Strategic Investments is 1.03 times more volatile than ENN Energy Holdings. It trades about -0.03 of its total potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.15 per unit of volatility. If you would invest  466.00  in ENN Energy Holdings on September 15, 2024 and sell it today you would earn a total of  209.00  from holding ENN Energy Holdings or generate 44.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Strategic Investments AS  vs.  ENN Energy Holdings

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ENN Energy Holdings

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Strategic Investments and ENN Energy

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

The idea behind Strategic Investments AS and ENN Energy Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.