Correlation Between Energisme and Nacon Sa

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

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

Diversification Opportunities for Energisme and Nacon Sa

-0.1

Correlation Coefficient

Energisme  Nacon Sa

Good diversification

The 3 months correlation between Energisme and Nacon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Energisme and Nacon Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nacon Sa 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 Nacon Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nacon Sa has no effect on the direction of Energisme i.e., Energisme and Nacon Sa go up and down completely randomly.

Pair Corralation between Energisme and Nacon Sa

Assuming the 90 days trading horizon Energisme is expected to generate 1.28 times more return on investment than Nacon Sa. However, Energisme is 1.28 times more volatile than Nacon Sa. It trades about 0.0 of its potential returns per unit of risk. Nacon Sa is currently generating about -0.14 per unit of risk. If you would invest  0.56  in Energisme on September 30, 2024 and sell it today you would lose (0.03) from holding Energisme or give up 5.36% of portfolio value over 90 days.

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

Energisme  vs.  Nacon Sa

Energisme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Energisme is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Nacon Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nacon 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Energisme and Nacon Sa

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

The idea behind Energisme and Nacon 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.