Correlation Between Enea AB and Softronic
Can any of the company-specific risk be diversified away by investing in both Enea AB and Softronic 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 Softronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enea AB and Softronic AB, you can compare the effects of market volatilities on Enea AB and Softronic 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 Softronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enea AB and Softronic.
Diversification Opportunities for Enea AB and Softronic
Very poor diversification
The 3 months correlation between Enea and Softronic is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Enea AB and Softronic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softronic 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 Softronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softronic AB has no effect on the direction of Enea AB i.e., Enea AB and Softronic go up and down completely randomly.
Pair Corralation between Enea AB and Softronic
Assuming the 90 days trading horizon Enea AB is expected to generate 1.34 times more return on investment than Softronic. However, Enea AB is 1.34 times more volatile than Softronic AB. It trades about 0.13 of its potential returns per unit of risk. Softronic AB is currently generating about 0.06 per unit of risk. If you would invest 6,660 in Enea AB on September 3, 2024 and sell it today you would earn a total of 3,170 from holding Enea AB or generate 47.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enea AB vs. Softronic AB
Performance |
| Timeline |
| Enea AB |
| Softronic AB |
Enea AB and Softronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enea AB and Softronic
The main advantage of trading using opposite Enea AB and Softronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enea AB position performs unexpectedly, Softronic 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 Softronic will offset losses from the drop in Softronic's long position.| Enea AB vs. Novotek AB | Enea AB vs. Addnode Group AB | Enea AB vs. Softronic AB | Enea AB vs. CTT Systems AB |
| Softronic vs. Svenska Aerogel Holding | Softronic vs. Acarix AS | Softronic vs. Clean Motion AB | Softronic vs. AroCell 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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