Correlation Between Enersize and Bambuser
Can any of the company-specific risk be diversified away by investing in both Enersize and Bambuser 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 Enersize and Bambuser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersize Oy and Bambuser AB, you can compare the effects of market volatilities on Enersize and Bambuser 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 Enersize with a short position of Bambuser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersize and Bambuser.
Diversification Opportunities for Enersize and Bambuser
Good diversification
The 3 months correlation between Enersize and Bambuser is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Enersize Oy and Bambuser AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bambuser AB and Enersize 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 Enersize Oy are associated (or correlated) with Bambuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bambuser AB has no effect on the direction of Enersize i.e., Enersize and Bambuser go up and down completely randomly.
Pair Corralation between Enersize and Bambuser
Assuming the 90 days trading horizon Enersize Oy is expected to generate 1.21 times more return on investment than Bambuser. However, Enersize is 1.21 times more volatile than Bambuser AB. It trades about -0.05 of its potential returns per unit of risk. Bambuser AB is currently generating about -0.2 per unit of risk. If you would invest 0.74 in Enersize Oy on August 29, 2024 and sell it today you would lose (0.11) from holding Enersize Oy or give up 14.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enersize Oy vs. Bambuser AB
Performance |
| Timeline |
| Enersize Oy |
| Bambuser AB |
Enersize and Bambuser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enersize and Bambuser
The main advantage of trading using opposite Enersize and Bambuser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersize position performs unexpectedly, Bambuser 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 Bambuser will offset losses from the drop in Bambuser's long position.The idea behind Enersize Oy and Bambuser AB 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.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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