Correlation Between Gedeon Richter and Eneraqua Technologies

Can any of the company-specific risk be diversified away by investing in both Gedeon Richter and Eneraqua Technologies 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 Gedeon Richter and Eneraqua Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gedeon Richter PLC and Eneraqua Technologies PLC, you can compare the effects of market volatilities on Gedeon Richter and Eneraqua Technologies 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 Gedeon Richter with a short position of Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gedeon Richter and Eneraqua Technologies.

Diversification Opportunities for Gedeon Richter and Eneraqua Technologies

-0.15

Correlation Coefficient

Gedeon Richter  Eneraqua Technologies

Good diversification

The 3 months correlation between Gedeon and Eneraqua is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Gedeon Richter PLC and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies PLC and Gedeon Richter 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 Gedeon Richter PLC are associated (or correlated) with Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Gedeon Richter i.e., Gedeon Richter and Eneraqua Technologies go up and down completely randomly.

Pair Corralation between Gedeon Richter and Eneraqua Technologies

Assuming the 90 days trading horizon Gedeon Richter PLC is expected to generate 17.88 times more return on investment than Eneraqua Technologies. However, Gedeon Richter is 17.88 times more volatile than Eneraqua Technologies PLC. It trades about 0.11 of its potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about 0.17 per unit of risk. If you would invest  504,000  in Gedeon Richter PLC on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Gedeon Richter PLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gedeon Richter PLC  vs.  Eneraqua Technologies PLC

Gedeon Richter PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gedeon Richter PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gedeon Richter unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eneraqua Technologies PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneraqua Technologies PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Eneraqua Technologies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gedeon Richter and Eneraqua Technologies

The main advantage of trading using opposite Gedeon Richter and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gedeon Richter position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.

The idea behind Gedeon Richter PLC and Eneraqua Technologies PLC 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..