Correlation Between Enerpac Tool and Natures Miracle

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

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

Diversification Opportunities for Enerpac Tool and Natures Miracle

-0.59

Correlation Coefficient

Enerpac Tool  Natures Miracle

Excellent diversification

The 3 months correlation between Enerpac and Natures is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Natures Miracle go up and down completely randomly.

Pair Corralation between Enerpac Tool and Natures Miracle

Given the investment horizon of 90 days Enerpac Tool is expected to generate 22.02 times less return on investment than Natures Miracle. But when comparing it to its historical volatility, Enerpac Tool Group is 27.38 times less risky than Natures Miracle. It trades about 0.18 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.69  in Natures Miracle Holding on September 2, 2024 and sell it today you would lose (0.55) from holding Natures Miracle Holding or give up 32.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	48.44%
Values	Daily Returns

Enerpac Tool Group  vs.  Natures Miracle Holding

Enerpac Tool Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

Natures Miracle Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Miracle Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, Natures Miracle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enerpac Tool and Natures Miracle

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

The idea behind Enerpac Tool Group and Natures Miracle Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.