Correlation Between ENN Energy and Strategic Investments

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

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

Diversification Opportunities for ENN Energy and Strategic Investments

-0.55

Correlation Coefficient

ENN Energy  Strategic Investments

Excellent diversification

The 3 months correlation between ENN and Strategic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments and ENN Energy 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 ENN Energy Holdings are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of ENN Energy i.e., ENN Energy and Strategic Investments go up and down completely randomly.

Pair Corralation between ENN Energy and Strategic Investments

Assuming the 90 days horizon ENN Energy Holdings is expected to generate 0.97 times more return on investment than Strategic Investments. However, ENN Energy Holdings is 1.03 times less risky than Strategic Investments. It trades about 0.15 of its potential returns per unit of risk. Strategic Investments AS is currently generating about -0.03 per unit of risk. If you would invest  466.00  in ENN Energy Holdings on September 15, 2024 and sell it today you would earn a total of  209.00  from holding ENN Energy Holdings or generate 44.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

ENN Energy Holdings  vs.  Strategic Investments AS

ENN Energy Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ENN Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ENN Energy and Strategic Investments

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

The idea behind ENN Energy Holdings and Strategic Investments AS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.