Correlation Between Energisme and Blockchain Group

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

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

Diversification Opportunities for Energisme and Blockchain Group

-0.52

Correlation Coefficient

Energisme  Blockchain Group

Excellent diversification

The 3 months correlation between Energisme and Blockchain is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Energisme and Blockchain Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blockchain Group and Energisme 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 Energisme are associated (or correlated) with Blockchain Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blockchain Group has no effect on the direction of Energisme i.e., Energisme and Blockchain Group go up and down completely randomly.

Pair Corralation between Energisme and Blockchain Group

Assuming the 90 days trading horizon Energisme is expected to generate 7.6 times less return on investment than Blockchain Group. But when comparing it to its historical volatility, Energisme is 1.58 times less risky than Blockchain Group. It trades about 0.06 of its potential returns per unit of risk. Blockchain Group SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Blockchain Group SA on October 8, 2024 and sell it today you would earn a total of  21.00  from holding Blockchain Group SA or generate 190.91% return on investment over 90 days.

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

Energisme  vs.  Blockchain Group SA

Energisme

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energisme are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Energisme reported solid returns over the last few months and may actually be approaching a breakup point.

Blockchain Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blockchain Group SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Blockchain Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energisme and Blockchain Group

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

The idea behind Energisme and Blockchain Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.