Correlation Between Energia Latina and Enjoy SA

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

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

Diversification Opportunities for Energia Latina and Enjoy SA

-0.83

Correlation Coefficient

Energia Latina  Enjoy SA

Pay attention - limited upside

The 3 months correlation between Energia and Enjoy is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Energia Latina SA and Enjoy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enjoy SA and Energia Latina 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 Energia Latina SA are associated (or correlated) with Enjoy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enjoy SA has no effect on the direction of Energia Latina i.e., Energia Latina and Enjoy SA go up and down completely randomly.

Pair Corralation between Energia Latina and Enjoy SA

Assuming the 90 days trading horizon Energia Latina SA is expected to generate 0.65 times more return on investment than Enjoy SA. However, Energia Latina SA is 1.55 times less risky than Enjoy SA. It trades about 0.05 of its potential returns per unit of risk. Enjoy SA is currently generating about -0.04 per unit of risk. If you would invest  65,749  in Energia Latina SA on September 5, 2024 and sell it today you would earn a total of  27,751  from holding Energia Latina SA or generate 42.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	61.55%
Values	Daily Returns

Energia Latina SA  vs.  Enjoy SA

Energia Latina SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energia Latina SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Energia Latina is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Enjoy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enjoy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Energia Latina and Enjoy SA

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

The idea behind Energia Latina SA and Enjoy SA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.