Correlation Between Encavis AG and EnviTec Biogas
Can any of the company-specific risk be diversified away by investing in both Encavis AG and EnviTec Biogas 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 Encavis AG and EnviTec Biogas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encavis AG and EnviTec Biogas AG, you can compare the effects of market volatilities on Encavis AG and EnviTec Biogas 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 Encavis AG with a short position of EnviTec Biogas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encavis AG and EnviTec Biogas.
Diversification Opportunities for Encavis AG and EnviTec Biogas
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Encavis and EnviTec is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Encavis AG and EnviTec Biogas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviTec Biogas AG and Encavis AG 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 Encavis AG are associated (or correlated) with EnviTec Biogas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviTec Biogas AG has no effect on the direction of Encavis AG i.e., Encavis AG and EnviTec Biogas go up and down completely randomly.
Pair Corralation between Encavis AG and EnviTec Biogas
Assuming the 90 days horizon Encavis AG is expected to generate 0.08 times more return on investment than EnviTec Biogas. However, Encavis AG is 12.03 times less risky than EnviTec Biogas. It trades about 0.15 of its potential returns per unit of risk. EnviTec Biogas AG is currently generating about 0.0 per unit of risk. If you would invest 1,737 in Encavis AG on November 2, 2024 and sell it today you would earn a total of 7.00 from holding Encavis AG or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Encavis AG vs. EnviTec Biogas AG
Performance |
| Timeline |
| Encavis AG |
| EnviTec Biogas AG |
Encavis AG and EnviTec Biogas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encavis AG and EnviTec Biogas
The main advantage of trading using opposite Encavis AG and EnviTec Biogas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encavis AG position performs unexpectedly, EnviTec Biogas 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 EnviTec Biogas will offset losses from the drop in EnviTec Biogas' long position.The idea behind Encavis AG and EnviTec Biogas AG 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.| EnviTec Biogas vs. Ormat Technologies | EnviTec Biogas vs. Neoen SA | EnviTec Biogas vs. Encavis AG | EnviTec Biogas vs. TOHOKU EL PWR |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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