Correlation Between Kinaxis and Enghouse Systems
Can any of the company-specific risk be diversified away by investing in both Kinaxis and Enghouse Systems 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 Kinaxis and Enghouse Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinaxis and Enghouse Systems, you can compare the effects of market volatilities on Kinaxis and Enghouse Systems 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 Kinaxis with a short position of Enghouse Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinaxis and Enghouse Systems.
Diversification Opportunities for Kinaxis and Enghouse Systems
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kinaxis and Enghouse is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kinaxis and Enghouse Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems and Kinaxis 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 Kinaxis are associated (or correlated) with Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of Kinaxis i.e., Kinaxis and Enghouse Systems go up and down completely randomly.
Pair Corralation between Kinaxis and Enghouse Systems
Assuming the 90 days trading horizon Kinaxis is expected to generate 1.32 times more return on investment than Enghouse Systems. However, Kinaxis is 1.32 times more volatile than Enghouse Systems. It trades about 0.21 of its potential returns per unit of risk. Enghouse Systems is currently generating about -0.13 per unit of risk. If you would invest 15,608 in Kinaxis on August 28, 2024 and sell it today you would earn a total of 1,558 from holding Kinaxis or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kinaxis vs. Enghouse Systems
Performance |
| Timeline |
| Kinaxis |
| Enghouse Systems |
Kinaxis and Enghouse Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinaxis and Enghouse Systems
The main advantage of trading using opposite Kinaxis and Enghouse Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinaxis position performs unexpectedly, Enghouse Systems 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 Enghouse Systems will offset losses from the drop in Enghouse Systems' long position.The idea behind Kinaxis and Enghouse Systems 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.| Enghouse Systems vs. Kinaxis | Enghouse Systems vs. Open Text Corp | Enghouse Systems vs. Descartes Systems Group | Enghouse Systems vs. Constellation Software |
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.
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