Correlation Between Endesa SA and ZENERGY B

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

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

Diversification Opportunities for Endesa SA and ZENERGY B

-0.6

Correlation Coefficient

Endesa SA  ZENERGY B

Excellent diversification

The 3 months correlation between Endesa and ZENERGY is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Endesa SA and ZENERGY B AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENERGY B AB and Endesa 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 Endesa SA are associated (or correlated) with ZENERGY B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENERGY B AB has no effect on the direction of Endesa SA i.e., Endesa SA and ZENERGY B go up and down completely randomly.

Pair Corralation between Endesa SA and ZENERGY B

Assuming the 90 days trading horizon Endesa SA is expected to generate 0.28 times more return on investment than ZENERGY B. However, Endesa SA is 3.58 times less risky than ZENERGY B. It trades about 0.05 of its potential returns per unit of risk. ZENERGY B AB is currently generating about -0.18 per unit of risk. If you would invest  1,957  in Endesa SA on September 22, 2024 and sell it today you would earn a total of  70.00  from holding Endesa SA or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Endesa SA  vs.  ZENERGY B AB

Endesa SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Endesa SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Endesa SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ZENERGY B AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZENERGY B AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Endesa SA and ZENERGY B

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

The idea behind Endesa SA and ZENERGY B AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.