Correlation Between Enter Air and ADX
Can any of the company-specific risk be diversified away by investing in both Enter Air and ADX 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 Enter Air and ADX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enter Air SA and ADX, you can compare the effects of market volatilities on Enter Air and ADX 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 Enter Air with a short position of ADX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enter Air and ADX.
Diversification Opportunities for Enter Air and ADX
Good diversification
The 3 months correlation between Enter and ADX is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX and Enter Air 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 Enter Air SA are associated (or correlated) with ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Enter Air i.e., Enter Air and ADX go up and down completely randomly.
Pair Corralation between Enter Air and ADX
Assuming the 90 days trading horizon Enter Air SA is expected to under-perform the ADX. But the stock apears to be less risky and, when comparing its historical volatility, Enter Air SA is 2.04 times less risky than ADX. The stock trades about -0.05 of its potential returns per unit of risk. The ADX is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 25.00 in ADX on August 31, 2024 and sell it today you would earn a total of 1.00 from holding ADX or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.0% |
| Values | Daily Returns |
Enter Air SA vs. ADX
Performance |
| Timeline |
| Enter Air SA |
| ADX |
Enter Air and ADX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enter Air and ADX
The main advantage of trading using opposite Enter Air and ADX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enter Air position performs unexpectedly, ADX 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 ADX will offset losses from the drop in ADX's long position.| Enter Air vs. Banco Santander SA | Enter Air vs. UniCredit SpA | Enter Air vs. CEZ as | Enter Air vs. Polski Koncern Naftowy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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