Correlation Between Encavis AG and TOHOKU EL
Can any of the company-specific risk be diversified away by investing in both Encavis AG and TOHOKU EL 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 TOHOKU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encavis AG and TOHOKU EL PWR, you can compare the effects of market volatilities on Encavis AG and TOHOKU EL 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 TOHOKU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encavis AG and TOHOKU EL.
Diversification Opportunities for Encavis AG and TOHOKU EL
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Encavis and TOHOKU is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Encavis AG and TOHOKU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOHOKU EL PWR 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 TOHOKU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOHOKU EL PWR has no effect on the direction of Encavis AG i.e., Encavis AG and TOHOKU EL go up and down completely randomly.
Pair Corralation between Encavis AG and TOHOKU EL
Assuming the 90 days horizon Encavis AG is expected to generate 0.15 times more return on investment than TOHOKU EL. However, Encavis AG is 6.69 times less risky than TOHOKU EL. It trades about 0.2 of its potential returns per unit of risk. TOHOKU EL PWR is currently generating about -0.08 per unit of risk. If you would invest 1,707 in Encavis AG on September 12, 2024 and sell it today you would earn a total of 33.00 from holding Encavis AG or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encavis AG vs. TOHOKU EL PWR
Performance |
| Timeline |
| Encavis AG |
| TOHOKU EL PWR |
Encavis AG and TOHOKU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encavis AG and TOHOKU EL
The main advantage of trading using opposite Encavis AG and TOHOKU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encavis AG position performs unexpectedly, TOHOKU EL 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 TOHOKU EL will offset losses from the drop in TOHOKU EL's long position.| Encavis AG vs. VERBUND AG ADR | Encavis AG vs. TOHOKU EL PWR | Encavis AG vs. BEIJJINGNENG CLERGHYC1 | Encavis AG vs. EnviTec Biogas AG |
| TOHOKU EL vs. GigaMedia | TOHOKU EL vs. Cass Information Systems | TOHOKU EL vs. MICRONIC MYDATA | TOHOKU EL vs. Penn National Gaming |
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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