Correlation Between Enags SA and Vocento
Can any of the company-specific risk be diversified away by investing in both Enags SA and Vocento 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 Enags SA and Vocento into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enags SA and Vocento, you can compare the effects of market volatilities on Enags SA and Vocento 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 Enags SA with a short position of Vocento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enags SA and Vocento.
Diversification Opportunities for Enags SA and Vocento
Very poor diversification
The 3 months correlation between Enags and Vocento is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Enags SA and Vocento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vocento and Enags SA 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 Enags SA are associated (or correlated) with Vocento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vocento has no effect on the direction of Enags SA i.e., Enags SA and Vocento go up and down completely randomly.
Pair Corralation between Enags SA and Vocento
Assuming the 90 days trading horizon Enags SA is expected to generate 1.69 times less return on investment than Vocento. But when comparing it to its historical volatility, Enags SA is 4.07 times less risky than Vocento. It trades about 0.21 of its potential returns per unit of risk. Vocento is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Vocento on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Vocento or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enags SA vs. Vocento
Performance |
| Timeline |
| Enags SA |
| Vocento |
Enags SA and Vocento Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enags SA and Vocento
The main advantage of trading using opposite Enags SA and Vocento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enags SA position performs unexpectedly, Vocento 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 Vocento will offset losses from the drop in Vocento's long position.The idea behind Enags SA and Vocento 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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