Correlation Between ALM Equity and Enorama Pharma
Can any of the company-specific risk be diversified away by investing in both ALM Equity and Enorama Pharma 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 ALM Equity and Enorama Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALM Equity AB and Enorama Pharma AB, you can compare the effects of market volatilities on ALM Equity and Enorama Pharma 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 ALM Equity with a short position of Enorama Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALM Equity and Enorama Pharma.
Diversification Opportunities for ALM Equity and Enorama Pharma
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ALM and Enorama is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and Enorama Pharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enorama Pharma AB and ALM Equity 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 ALM Equity AB are associated (or correlated) with Enorama Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enorama Pharma AB has no effect on the direction of ALM Equity i.e., ALM Equity and Enorama Pharma go up and down completely randomly.
Pair Corralation between ALM Equity and Enorama Pharma
Assuming the 90 days trading horizon ALM Equity AB is expected to under-perform the Enorama Pharma. But the stock apears to be less risky and, when comparing its historical volatility, ALM Equity AB is 2.48 times less risky than Enorama Pharma. The stock trades about -0.38 of its potential returns per unit of risk. The Enorama Pharma AB is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 388.00 in Enorama Pharma AB on September 1, 2024 and sell it today you would lose (42.00) from holding Enorama Pharma AB or give up 10.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALM Equity AB vs. Enorama Pharma AB
Performance |
| Timeline |
| ALM Equity AB |
| Enorama Pharma AB |
ALM Equity and Enorama Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALM Equity and Enorama Pharma
The main advantage of trading using opposite ALM Equity and Enorama Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALM Equity position performs unexpectedly, Enorama Pharma 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 Enorama Pharma will offset losses from the drop in Enorama Pharma's long position.| ALM Equity vs. ALM Equity AB | ALM Equity vs. Bufab Holding AB | ALM Equity vs. Atrium Ljungberg AB | ALM Equity vs. Bravida Holding AB |
| Enorama Pharma vs. Kancera AB | Enorama Pharma vs. Cyxone AB | Enorama Pharma vs. Lidds AB | Enorama Pharma vs. Cantargia AB |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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