Correlation Between Themac Resources and Eni SPA

Can any of the company-specific risk be diversified away by investing in both Themac Resources and Eni SPA 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 Themac Resources and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Themac Resources Group and Enterprise Group, you can compare the effects of market volatilities on Themac Resources and Eni SPA 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 Themac Resources with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themac Resources and Eni SPA.

Diversification Opportunities for Themac Resources and Eni SPA

-0.33

Correlation Coefficient

Themac Resources  Eni SPA

Very good diversification

The 3 months correlation between Themac and Eni is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Themac Resources Group and Enterprise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Group and Themac Resources 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 Themac Resources Group are associated (or correlated) with Eni SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Group has no effect on the direction of Themac Resources i.e., Themac Resources and Eni SPA go up and down completely randomly.

Pair Corralation between Themac Resources and Eni SPA

Assuming the 90 days horizon Themac Resources is expected to generate 1.26 times less return on investment than Eni SPA. In addition to that, Themac Resources is 1.47 times more volatile than Enterprise Group. It trades about 0.08 of its total potential returns per unit of risk. Enterprise Group is currently generating about 0.14 per unit of volatility. If you would invest  102.00  in Enterprise Group on September 22, 2024 and sell it today you would earn a total of  80.00  from holding Enterprise Group or generate 78.43% return on investment over 90 days.

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

Themac Resources Group  vs.  Enterprise Group

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Enterprise Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eni SPA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Themac Resources and Eni SPA

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

The idea behind Themac Resources Group and Enterprise 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.