Correlation Between Endeavour Mining and CeoTronics

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

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

Diversification Opportunities for Endeavour Mining and CeoTronics

0.46

Correlation Coefficient

Endeavour Mining  CeoTronics

Very weak diversification

The 3 months correlation between Endeavour and CeoTronics is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and Endeavour Mining 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 Endeavour Mining PLC are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and CeoTronics go up and down completely randomly.

Pair Corralation between Endeavour Mining and CeoTronics

Assuming the 90 days trading horizon Endeavour Mining is expected to generate 2.63 times less return on investment than CeoTronics. But when comparing it to its historical volatility, Endeavour Mining PLC is 1.73 times less risky than CeoTronics. It trades about 0.12 of its potential returns per unit of risk. CeoTronics AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  580.00  in CeoTronics AG on December 26, 2024 and sell it today you would earn a total of  345.00  from holding CeoTronics AG or generate 59.48% return on investment over 90 days.

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

Endeavour Mining PLC  vs.  CeoTronics AG

Endeavour Mining PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Endeavour Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

CeoTronics AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Mining and CeoTronics

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

The idea behind Endeavour Mining PLC and CeoTronics AG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.