Correlation Between ENCE Energa and Acerinox
Can any of the company-specific risk be diversified away by investing in both ENCE Energa and Acerinox 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 ENCE Energa and Acerinox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENCE Energa y and Acerinox, you can compare the effects of market volatilities on ENCE Energa and Acerinox 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 ENCE Energa with a short position of Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENCE Energa and Acerinox.
Diversification Opportunities for ENCE Energa and Acerinox
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ENCE and Acerinox is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and ENCE Energa 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 ENCE Energa y are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of ENCE Energa i.e., ENCE Energa and Acerinox go up and down completely randomly.
Pair Corralation between ENCE Energa and Acerinox
Assuming the 90 days trading horizon ENCE Energa y is expected to generate 0.98 times more return on investment than Acerinox. However, ENCE Energa y is 1.02 times less risky than Acerinox. It trades about 0.05 of its potential returns per unit of risk. Acerinox is currently generating about 0.01 per unit of risk. If you would invest 312.00 in ENCE Energa y on October 22, 2024 and sell it today you would earn a total of 25.00 from holding ENCE Energa y or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENCE Energa y vs. Acerinox
Performance |
| Timeline |
| ENCE Energa y |
| Acerinox |
ENCE Energa and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENCE Energa and Acerinox
The main advantage of trading using opposite ENCE Energa and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENCE Energa position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox's long position.| ENCE Energa vs. Acerinox | ENCE Energa vs. CIE Automotive SA | ENCE Energa vs. Mapfre | ENCE Energa vs. ArcelorMittal SA |
| Acerinox vs. ACS Actividades de | Acerinox vs. ArcelorMittal SA | Acerinox vs. Mapfre | Acerinox vs. Ferrovial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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