Correlation Between H Lundbeck and Ennogie Solar

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

By analyzing existing cross correlation between H Lundbeck AS and Ennogie Solar Group, you can compare the effects of market volatilities on H Lundbeck and Ennogie Solar 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 H Lundbeck with a short position of Ennogie Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of H Lundbeck and Ennogie Solar.

Diversification Opportunities for H Lundbeck and Ennogie Solar

0.28

Correlation Coefficient

H Lundbeck  Ennogie Solar

Modest diversification

The 3 months correlation between HLUN-B and Ennogie is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding H Lundbeck AS and Ennogie Solar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennogie Solar Group and H Lundbeck 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 H Lundbeck AS are associated (or correlated) with Ennogie Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennogie Solar Group has no effect on the direction of H Lundbeck i.e., H Lundbeck and Ennogie Solar go up and down completely randomly.

Pair Corralation between H Lundbeck and Ennogie Solar

Assuming the 90 days trading horizon H Lundbeck AS is expected to generate 0.44 times more return on investment than Ennogie Solar. However, H Lundbeck AS is 2.25 times less risky than Ennogie Solar. It trades about -0.07 of its potential returns per unit of risk. Ennogie Solar Group is currently generating about -0.14 per unit of risk. If you would invest  4,726  in H Lundbeck AS on September 4, 2024 and sell it today you would lose (402.00) from holding H Lundbeck AS or give up 8.51% of portfolio value over 90 days.

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

H Lundbeck AS  vs.  Ennogie Solar Group

H Lundbeck AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H Lundbeck AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ennogie Solar Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ennogie Solar Group 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with H Lundbeck and Ennogie Solar

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

The idea behind H Lundbeck AS and Ennogie Solar Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.