Correlation Between Real Matters and Enghouse Systems

Can any of the company-specific risk be diversified away by investing in both Real Matters and Enghouse Systems 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 Real Matters and Enghouse Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Real Matters and Enghouse Systems, you can compare the effects of market volatilities on Real Matters and Enghouse Systems 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 Real Matters with a short position of Enghouse Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Matters and Enghouse Systems.

Diversification Opportunities for Real Matters and Enghouse Systems

0.83

Correlation Coefficient

Real Matters  Enghouse Systems

Very poor diversification

The 3 months correlation between Real and Enghouse is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Real Matters and Enghouse Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems and Real Matters 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 Real Matters are associated (or correlated) with Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of Real Matters i.e., Real Matters and Enghouse Systems go up and down completely randomly.

Pair Corralation between Real Matters and Enghouse Systems

Assuming the 90 days trading horizon Real Matters is expected to under-perform the Enghouse Systems. In addition to that, Real Matters is 1.55 times more volatile than Enghouse Systems. It trades about -0.07 of its total potential returns per unit of risk. Enghouse Systems is currently generating about 0.02 per unit of volatility. If you would invest  2,875  in Enghouse Systems on August 31, 2024 and sell it today you would earn a total of  40.00  from holding Enghouse Systems or generate 1.39% return on investment over 90 days.

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

Real Matters  vs.  Enghouse Systems

Real Matters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Matters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Enghouse Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enghouse Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Real Matters and Enghouse Systems

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

The idea behind Real Matters and Enghouse Systems 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.