Correlation Between Ennostar and Sitronix Technology

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

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

Diversification Opportunities for Ennostar and Sitronix Technology

0.32

Correlation Coefficient

Ennostar  Sitronix Technology

Weak diversification

The 3 months correlation between Ennostar and Sitronix is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ennostar and Sitronix Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitronix Technology Corp and Ennostar 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 Ennostar are associated (or correlated) with Sitronix Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitronix Technology Corp has no effect on the direction of Ennostar i.e., Ennostar and Sitronix Technology go up and down completely randomly.

Pair Corralation between Ennostar and Sitronix Technology

Assuming the 90 days trading horizon Ennostar is expected to generate 1.35 times more return on investment than Sitronix Technology. However, Ennostar is 1.35 times more volatile than Sitronix Technology Corp. It trades about 0.07 of its potential returns per unit of risk. Sitronix Technology Corp is currently generating about -0.08 per unit of risk. If you would invest  4,100  in Ennostar on September 13, 2024 and sell it today you would earn a total of  310.00  from holding Ennostar or generate 7.56% return on investment over 90 days.

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

Ennostar  vs.  Sitronix Technology Corp

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.

Sitronix Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sitronix Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ennostar and Sitronix Technology

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

The idea behind Ennostar and Sitronix Technology Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.