Correlation Between Enersize and Litium AB
Can any of the company-specific risk be diversified away by investing in both Enersize and Litium 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 Enersize and Litium AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersize Oy and Litium AB, you can compare the effects of market volatilities on Enersize and Litium 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 Enersize with a short position of Litium AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersize and Litium AB.
Diversification Opportunities for Enersize and Litium AB
Average diversification
The 3 months correlation between Enersize and Litium is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Enersize Oy and Litium AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litium 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 Litium AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litium AB has no effect on the direction of Enersize i.e., Enersize and Litium AB go up and down completely randomly.
Pair Corralation between Enersize and Litium AB
Assuming the 90 days trading horizon Enersize Oy is expected to generate 3.75 times more return on investment than Litium AB. However, Enersize is 3.75 times more volatile than Litium AB. It trades about 0.0 of its potential returns per unit of risk. Litium AB is currently generating about -0.02 per unit of risk. If you would invest 2.37 in Enersize Oy on September 1, 2024 and sell it today you would lose (1.84) from holding Enersize Oy or give up 77.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enersize Oy vs. Litium AB
Performance |
| Timeline |
| Enersize Oy |
| Litium AB |
Enersize and Litium AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enersize and Litium AB
The main advantage of trading using opposite Enersize and Litium AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersize position performs unexpectedly, Litium 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 Litium AB will offset losses from the drop in Litium AB's long position.The idea behind Enersize Oy and Litium 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.| Litium AB vs. Avensia publ AB | Litium AB vs. Micro Systemation AB | Litium AB vs. Generic Sweden publ | Litium AB vs. FormPipe Software 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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