Correlation Between VIVA WINE and ENN Energy

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

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

Diversification Opportunities for VIVA WINE and ENN Energy

-0.75

Correlation Coefficient

VIVA WINE  ENN Energy

Pay attention - limited upside

The 3 months correlation between VIVA and ENN is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of VIVA WINE i.e., VIVA WINE and ENN Energy go up and down completely randomly.

Pair Corralation between VIVA WINE and ENN Energy

Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 1.5 times more return on investment than ENN Energy. However, VIVA WINE is 1.5 times more volatile than ENN Energy Holdings. It trades about 0.06 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.02 per unit of risk. If you would invest  124.00  in VIVA WINE GROUP on September 12, 2024 and sell it today you would earn a total of  210.00  from holding VIVA WINE GROUP or generate 169.35% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  ENN Energy Holdings

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ENN Energy Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIVA WINE and ENN Energy

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

The idea behind VIVA WINE GROUP and ENN Energy Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.