Correlation Between ARISTOCRAT LEISURE and ENN Energy
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and ENN Energy Holdings, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and ENN Energy.
Diversification Opportunities for ARISTOCRAT LEISURE and ENN Energy
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARISTOCRAT and ENN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and ENN Energy go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and ENN Energy
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.14 times less return on investment than ENN Energy. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 2.92 times less risky than ENN Energy. It trades about 0.19 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 370.00 in ENN Energy Holdings on September 4, 2024 and sell it today you would earn a total of 255.00 from holding ENN Energy Holdings or generate 68.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. ENN Energy Holdings
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| ENN Energy Holdings |
ARISTOCRAT LEISURE and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and ENN Energy
The main advantage of trading using opposite ARISTOCRAT LEISURE and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. TOTAL GABON | ARISTOCRAT LEISURE vs. Walgreens Boots Alliance | ARISTOCRAT LEISURE vs. Peak Resources Limited |
| ENN Energy vs. Evolution Mining Limited | ENN Energy vs. Sterling Construction | ENN Energy vs. ADRIATIC METALS LS 013355 | ENN Energy vs. VIVA WINE GROUP |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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