Correlation Between Apple and ENN ENERGY

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

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

Diversification Opportunities for Apple and ENN ENERGY

0.65

Correlation Coefficient

Apple  ENN ENERGY

Poor diversification

The 3 months correlation between Apple and ENN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ENN ENERGY HLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN ENERGY HLD and Apple 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 Apple Inc are associated (or correlated) with ENN ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN ENERGY HLD has no effect on the direction of Apple i.e., Apple and ENN ENERGY go up and down completely randomly.

Pair Corralation between Apple and ENN ENERGY

Assuming the 90 days trading horizon Apple is expected to generate 1.47 times less return on investment than ENN ENERGY. But when comparing it to its historical volatility, Apple Inc is 2.57 times less risky than ENN ENERGY. It trades about 0.11 of its potential returns per unit of risk. ENN ENERGY HLD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  466.00  in ENN ENERGY HLD on October 25, 2024 and sell it today you would earn a total of  194.00  from holding ENN ENERGY HLD or generate 41.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.52%
Values	Daily Returns

Apple Inc  vs.  ENN ENERGY HLD

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ENN ENERGY HLD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENN ENERGY HLD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ENN ENERGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and ENN ENERGY

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

The idea behind Apple Inc and ENN ENERGY HLD 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.