Correlation Between Enea AB and Realfiction Holding

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

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

Diversification Opportunities for Enea AB and Realfiction Holding

-0.9

Correlation Coefficient

Enea AB  Realfiction Holding

Pay attention - limited upside

The 3 months correlation between Enea and Realfiction is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Enea AB and Realfiction Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realfiction Holding and Enea AB 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 Enea AB are associated (or correlated) with Realfiction Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realfiction Holding has no effect on the direction of Enea AB i.e., Enea AB and Realfiction Holding go up and down completely randomly.

Pair Corralation between Enea AB and Realfiction Holding

Assuming the 90 days trading horizon Enea AB is expected to generate 0.6 times more return on investment than Realfiction Holding. However, Enea AB is 1.66 times less risky than Realfiction Holding. It trades about 0.16 of its potential returns per unit of risk. Realfiction Holding AB is currently generating about -0.26 per unit of risk. If you would invest  8,270  in Enea AB on September 14, 2024 and sell it today you would earn a total of  1,770  from holding Enea AB or generate 21.4% return on investment over 90 days.

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

Enea AB  vs.  Realfiction Holding AB

Enea AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enea AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enea AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Realfiction Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enea AB and Realfiction Holding

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

The idea behind Enea AB and Realfiction Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.