Correlation Between Eneos Holdings and Kunlun Energy

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

By analyzing existing cross correlation between Eneos Holdings ADR and Kunlun Energy Co, you can compare the effects of market volatilities on Eneos Holdings and Kunlun Energy 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 Eneos Holdings with a short position of Kunlun Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneos Holdings and Kunlun Energy.

Diversification Opportunities for Eneos Holdings and Kunlun Energy

0.09

Correlation Coefficient

Eneos Holdings  Kunlun Energy

Significant diversification

The 3 months correlation between Eneos and Kunlun is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eneos Holdings ADR and Kunlun Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunlun Energy and Eneos Holdings 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 Eneos Holdings ADR are associated (or correlated) with Kunlun Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunlun Energy has no effect on the direction of Eneos Holdings i.e., Eneos Holdings and Kunlun Energy go up and down completely randomly.

Pair Corralation between Eneos Holdings and Kunlun Energy

Assuming the 90 days horizon Eneos Holdings ADR is expected to generate 2.02 times more return on investment than Kunlun Energy. However, Eneos Holdings is 2.02 times more volatile than Kunlun Energy Co. It trades about 0.08 of its potential returns per unit of risk. Kunlun Energy Co is currently generating about 0.14 per unit of risk. If you would invest  961.00  in Eneos Holdings ADR on September 21, 2024 and sell it today you would earn a total of  63.00  from holding Eneos Holdings ADR or generate 6.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Eneos Holdings ADR  vs.  Kunlun Energy Co

Eneos Holdings ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Eneos Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Kunlun Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kunlun Energy Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Kunlun Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eneos Holdings and Kunlun Energy

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

The idea behind Eneos Holdings ADR and Kunlun Energy Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.