Correlation Between Allegroeu and Enea SA

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

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

Diversification Opportunities for Allegroeu and Enea SA

-0.64

Correlation Coefficient

Allegroeu  Enea SA

Excellent diversification

The 3 months correlation between Allegroeu and Enea is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu SA and Enea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enea SA and Allegroeu 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 Allegroeu SA are associated (or correlated) with Enea SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enea SA has no effect on the direction of Allegroeu i.e., Allegroeu and Enea SA go up and down completely randomly.

Pair Corralation between Allegroeu and Enea SA

Assuming the 90 days trading horizon Allegroeu is expected to generate 37.44 times less return on investment than Enea SA. But when comparing it to its historical volatility, Allegroeu SA is 1.25 times less risky than Enea SA. It trades about 0.0 of its potential returns per unit of risk. Enea SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  658.00  in Enea SA on October 12, 2024 and sell it today you would earn a total of  672.00  from holding Enea SA or generate 102.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Allegroeu SA  vs.  Enea SA

Allegroeu SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegroeu SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Enea SA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enea SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Enea SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegroeu and Enea SA

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

The idea behind Allegroeu SA and Enea SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.