Correlation Between ADS TEC and Enovix Corp

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

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

Diversification Opportunities for ADS TEC and Enovix Corp

0.17

Correlation Coefficient

ADS TEC  Enovix Corp

Average diversification

The 3 months correlation between ADS and Enovix is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ADS TEC ENERGY PLC and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and ADS TEC 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 ADS TEC ENERGY PLC are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of ADS TEC i.e., ADS TEC and Enovix Corp go up and down completely randomly.

Pair Corralation between ADS TEC and Enovix Corp

Assuming the 90 days horizon ADS TEC ENERGY PLC is expected to generate 22.77 times more return on investment than Enovix Corp. However, ADS TEC is 22.77 times more volatile than Enovix Corp. It trades about 0.12 of its potential returns per unit of risk. Enovix Corp is currently generating about 0.05 per unit of risk. If you would invest  212.00  in ADS TEC ENERGY PLC on September 3, 2024 and sell it today you would earn a total of  130.00  from holding ADS TEC ENERGY PLC or generate 61.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

ADS TEC ENERGY PLC  vs.  Enovix Corp

ADS TEC ENERGY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADS TEC ENERGY PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, ADS TEC showed solid returns over the last few months and may actually be approaching a breakup point.

Enovix Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enovix Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Enovix Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADS TEC and Enovix Corp

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

The idea behind ADS TEC ENERGY PLC and Enovix 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 Transaction History module to view history of all your transactions and understand their impact on performance.