Correlation Between ENF Technology and Innometry

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

By analyzing existing cross correlation between ENF Technology Co and Innometry Co, you can compare the effects of market volatilities on ENF Technology and Innometry 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 ENF Technology with a short position of Innometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENF Technology and Innometry.

Diversification Opportunities for ENF Technology and Innometry

-0.39

Correlation Coefficient

ENF Technology  Innometry

Very good diversification

The 3 months correlation between ENF and Innometry is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ENF Technology Co and Innometry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innometry and ENF Technology 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 ENF Technology Co are associated (or correlated) with Innometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innometry has no effect on the direction of ENF Technology i.e., ENF Technology and Innometry go up and down completely randomly.

Pair Corralation between ENF Technology and Innometry

Assuming the 90 days trading horizon ENF Technology Co is expected to generate 1.42 times more return on investment than Innometry. However, ENF Technology is 1.42 times more volatile than Innometry Co. It trades about 0.13 of its potential returns per unit of risk. Innometry Co is currently generating about -0.12 per unit of risk. If you would invest  1,633,051  in ENF Technology Co on October 25, 2024 and sell it today you would earn a total of  426,949  from holding ENF Technology Co or generate 26.14% return on investment over 90 days.

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

ENF Technology Co  vs.  Innometry Co

ENF Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENF Technology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ENF Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Innometry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innometry Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ENF Technology and Innometry

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

The idea behind ENF Technology Co and Innometry Co 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.