Correlation Between Enfusion and Global Business

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

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

Diversification Opportunities for Enfusion and Global Business

0.9

Correlation Coefficient

Enfusion  Global Business

Almost no diversification

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

Pair Corralation between Enfusion and Global Business

Given the investment horizon of 90 days Enfusion is expected to generate 0.93 times more return on investment than Global Business. However, Enfusion is 1.07 times less risky than Global Business. It trades about 0.19 of its potential returns per unit of risk. Global Business Travel is currently generating about 0.18 per unit of risk. If you would invest  840.00  in Enfusion on September 14, 2024 and sell it today you would earn a total of  216.00  from holding Enfusion or generate 25.71% return on investment over 90 days.

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

Enfusion  vs.  Global Business Travel

Enfusion

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 15 (%) 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.

Global Business Travel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Business Travel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Global Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enfusion and Global Business

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

The idea behind Enfusion and Global Business Travel 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.