Correlation Between Enorama Pharma and Absolent Group
Can any of the company-specific risk be diversified away by investing in both Enorama Pharma and Absolent Group 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 Enorama Pharma and Absolent Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enorama Pharma AB and Absolent Group AB, you can compare the effects of market volatilities on Enorama Pharma and Absolent Group 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 Enorama Pharma with a short position of Absolent Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enorama Pharma and Absolent Group.
Diversification Opportunities for Enorama Pharma and Absolent Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enorama and Absolent is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Enorama Pharma AB and Absolent Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolent Group AB and Enorama Pharma 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 Enorama Pharma AB are associated (or correlated) with Absolent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolent Group AB has no effect on the direction of Enorama Pharma i.e., Enorama Pharma and Absolent Group go up and down completely randomly.
Pair Corralation between Enorama Pharma and Absolent Group
Assuming the 90 days trading horizon Enorama Pharma AB is expected to generate 2.34 times more return on investment than Absolent Group. However, Enorama Pharma is 2.34 times more volatile than Absolent Group AB. It trades about -0.1 of its potential returns per unit of risk. Absolent Group AB is currently generating about -0.61 per unit of risk. If you would invest 388.00 in Enorama Pharma AB on September 1, 2024 and sell it today you would lose (42.00) from holding Enorama Pharma AB or give up 10.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enorama Pharma AB vs. Absolent Group AB
Performance |
| Timeline |
| Enorama Pharma AB |
| Absolent Group AB |
Enorama Pharma and Absolent Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enorama Pharma and Absolent Group
The main advantage of trading using opposite Enorama Pharma and Absolent Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enorama Pharma position performs unexpectedly, Absolent Group 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 Absolent Group will offset losses from the drop in Absolent Group's long position.| Enorama Pharma vs. Kancera AB | Enorama Pharma vs. Cyxone AB | Enorama Pharma vs. Lidds AB | Enorama Pharma vs. Cantargia AB |
| Absolent Group vs. AQ Group AB | Absolent Group vs. Troax Group AB | Absolent Group vs. Bufab Holding AB | Absolent Group vs. Beijer Ref 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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