Correlation Between Visual Photonics and Ennostar

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

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

Diversification Opportunities for Visual Photonics and Ennostar

0.33

Correlation Coefficient

Visual Photonics  Ennostar

Weak diversification

The 3 months correlation between Visual and Ennostar is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visual Photonics Epitaxy and Ennostar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennostar and Visual Photonics 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 Visual Photonics Epitaxy are associated (or correlated) with Ennostar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennostar has no effect on the direction of Visual Photonics i.e., Visual Photonics and Ennostar go up and down completely randomly.

Pair Corralation between Visual Photonics and Ennostar

Assuming the 90 days trading horizon Visual Photonics Epitaxy is expected to generate 1.77 times more return on investment than Ennostar. However, Visual Photonics is 1.77 times more volatile than Ennostar. It trades about 0.1 of its potential returns per unit of risk. Ennostar is currently generating about 0.07 per unit of risk. If you would invest  13,750  in Visual Photonics Epitaxy on September 13, 2024 and sell it today you would earn a total of  2,500  from holding Visual Photonics Epitaxy or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Visual Photonics Epitaxy  vs.  Ennostar

Visual Photonics Epitaxy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visual Photonics Epitaxy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Visual Photonics showed solid returns over the last few months and may actually be approaching a breakup point.

Ennostar

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ennostar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ennostar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visual Photonics and Ennostar

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

The idea behind Visual Photonics Epitaxy and Ennostar 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.