Correlation Between Inter Cars and Enea SA

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

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

Diversification Opportunities for Inter Cars and Enea SA

0.41

Correlation Coefficient

Inter Cars  Enea SA

Very weak diversification

The 3 months correlation between Inter and Enea is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars SA and Enea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enea SA and Inter Cars 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 Inter Cars 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 Inter Cars i.e., Inter Cars and Enea SA go up and down completely randomly.

Pair Corralation between Inter Cars and Enea SA

Assuming the 90 days trading horizon Inter Cars is expected to generate 1.82 times less return on investment than Enea SA. But when comparing it to its historical volatility, Inter Cars SA is 1.15 times less risky than Enea SA. It trades about 0.28 of its potential returns per unit of risk. Enea SA is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  1,134  in Enea SA on October 10, 2024 and sell it today you would earn a total of  194.00  from holding Enea SA or generate 17.11% return on investment over 90 days.

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

Inter Cars SA  vs.  Enea SA

Inter Cars SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Cars SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Inter Cars may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enea SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enea SA are ranked lower than 16 (%) 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 Inter Cars and Enea SA

The main advantage of trading using opposite Inter Cars and Enea SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Cars 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 Inter Cars 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.