Correlation Between Mekonomen and Enersize
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Enersize 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 Mekonomen and Enersize into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and Enersize Oy, you can compare the effects of market volatilities on Mekonomen and Enersize 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 Mekonomen with a short position of Enersize. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Enersize.
Diversification Opportunities for Mekonomen and Enersize
Weak diversification
The 3 months correlation between Mekonomen and Enersize is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Enersize Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersize Oy and Mekonomen 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 Mekonomen AB are associated (or correlated) with Enersize. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersize Oy has no effect on the direction of Mekonomen i.e., Mekonomen and Enersize go up and down completely randomly.
Pair Corralation between Mekonomen and Enersize
Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.21 times more return on investment than Enersize. However, Mekonomen AB is 4.79 times less risky than Enersize. It trades about 0.03 of its potential returns per unit of risk. Enersize Oy is currently generating about -0.01 per unit of risk. If you would invest 10,728 in Mekonomen AB on August 30, 2024 and sell it today you would earn a total of 2,472 from holding Mekonomen AB or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mekonomen AB vs. Enersize Oy
Performance |
| Timeline |
| Mekonomen AB |
| Enersize Oy |
Mekonomen and Enersize Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Enersize
The main advantage of trading using opposite Mekonomen and Enersize positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Enersize 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 Enersize will offset losses from the drop in Enersize's long position.| Mekonomen vs. Sinch AB | Mekonomen vs. Hexatronic Group AB | Mekonomen vs. NIBE Industrier AB | Mekonomen vs. Evolution 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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