Correlation Between EnX and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both EnX and Deneb Investments 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 EnX and Deneb Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between enX Group and Deneb Investments, you can compare the effects of market volatilities on EnX and Deneb Investments 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 EnX with a short position of Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnX and Deneb Investments.
Diversification Opportunities for EnX and Deneb Investments
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EnX and Deneb is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding enX Group and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments and EnX 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 enX Group are associated (or correlated) with Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of EnX i.e., EnX and Deneb Investments go up and down completely randomly.
Pair Corralation between EnX and Deneb Investments
Assuming the 90 days trading horizon enX Group is expected to under-perform the Deneb Investments. In addition to that, EnX is 2.35 times more volatile than Deneb Investments. It trades about -0.06 of its total potential returns per unit of risk. Deneb Investments is currently generating about 0.04 per unit of volatility. If you would invest 22,000 in Deneb Investments on September 3, 2024 and sell it today you would earn a total of 2,000 from holding Deneb Investments or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
enX Group vs. Deneb Investments
Performance |
| Timeline |
| enX Group |
| Deneb Investments |
EnX and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnX and Deneb Investments
The main advantage of trading using opposite EnX and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnX position performs unexpectedly, Deneb Investments 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.The idea behind enX Group and Deneb Investments 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.| Deneb Investments vs. Bidvest Group | Deneb Investments vs. Hosken Consolidated Investments | Deneb Investments vs. Brikor |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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