Correlation Between Enea AB and Nolato AB
Can any of the company-specific risk be diversified away by investing in both Enea AB and Nolato AB 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 Enea AB and Nolato AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enea AB and Nolato AB, you can compare the effects of market volatilities on Enea AB and Nolato AB 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 Enea AB with a short position of Nolato AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enea AB and Nolato AB.
Diversification Opportunities for Enea AB and Nolato AB
Very weak diversification
The 3 months correlation between Enea and Nolato is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Enea AB and Nolato AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nolato AB and Enea AB 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 Enea AB are associated (or correlated) with Nolato AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nolato AB has no effect on the direction of Enea AB i.e., Enea AB and Nolato AB go up and down completely randomly.
Pair Corralation between Enea AB and Nolato AB
Assuming the 90 days trading horizon Enea AB is expected to generate 1.14 times more return on investment than Nolato AB. However, Enea AB is 1.14 times more volatile than Nolato AB. It trades about 0.11 of its potential returns per unit of risk. Nolato AB is currently generating about 0.02 per unit of risk. If you would invest 5,530 in Enea AB on August 29, 2024 and sell it today you would earn a total of 4,300 from holding Enea AB or generate 77.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enea AB vs. Nolato AB
Performance |
| Timeline |
| Enea AB |
| Nolato AB |
Enea AB and Nolato AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enea AB and Nolato AB
The main advantage of trading using opposite Enea AB and Nolato AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enea AB position performs unexpectedly, Nolato AB 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 Nolato AB will offset losses from the drop in Nolato AB's long position.| Enea AB vs. Know IT AB | Enea AB vs. Proact IT Group | Enea AB vs. Hexatronic Group AB | Enea AB vs. Inwido AB |
| Nolato AB vs. HEXPOL AB | Nolato AB vs. Trelleborg AB | Nolato AB vs. Indutrade AB | Nolato AB vs. Vitrolife 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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