Correlation Between Faes Farma and ENCE Energa
Can any of the company-specific risk be diversified away by investing in both Faes Farma and ENCE Energa 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 Faes Farma and ENCE Energa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faes Farma SA and ENCE Energa y, you can compare the effects of market volatilities on Faes Farma and ENCE Energa 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 Faes Farma with a short position of ENCE Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faes Farma and ENCE Energa.
Diversification Opportunities for Faes Farma and ENCE Energa
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Faes and ENCE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Faes Farma SA and ENCE Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCE Energa y and Faes Farma 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 Faes Farma SA are associated (or correlated) with ENCE Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCE Energa y has no effect on the direction of Faes Farma i.e., Faes Farma and ENCE Energa go up and down completely randomly.
Pair Corralation between Faes Farma and ENCE Energa
Assuming the 90 days trading horizon Faes Farma SA is expected to under-perform the ENCE Energa. But the stock apears to be less risky and, when comparing its historical volatility, Faes Farma SA is 1.85 times less risky than ENCE Energa. The stock trades about -0.11 of its potential returns per unit of risk. The ENCE Energa y is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 305.00 in ENCE Energa y on August 28, 2024 and sell it today you would lose (19.00) from holding ENCE Energa y or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faes Farma SA vs. ENCE Energa y
Performance |
| Timeline |
| Faes Farma SA |
| ENCE Energa y |
Faes Farma and ENCE Energa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faes Farma and ENCE Energa
The main advantage of trading using opposite Faes Farma and ENCE Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faes Farma position performs unexpectedly, ENCE Energa 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 ENCE Energa will offset losses from the drop in ENCE Energa's long position.| Faes Farma vs. ENCE Energa y | Faes Farma vs. Viscofan | Faes Farma vs. Vidrala SA | Faes Farma vs. Ebro Foods |
| ENCE Energa vs. ACS Actividades de | ENCE Energa vs. ArcelorMittal SA | ENCE Energa vs. Mapfre | ENCE Energa vs. Ferrovial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |