Correlation Between Cenergy Holdings and Profile Systems

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

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

Diversification Opportunities for Cenergy Holdings and Profile Systems

0.26

Correlation Coefficient

Cenergy Holdings  Profile Systems

Modest diversification

The 3 months correlation between Cenergy and Profile is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cenergy Holdings SA and Profile Systems Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profile Systems Software and Cenergy Holdings 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 Cenergy Holdings SA are associated (or correlated) with Profile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profile Systems Software has no effect on the direction of Cenergy Holdings i.e., Cenergy Holdings and Profile Systems go up and down completely randomly.

Pair Corralation between Cenergy Holdings and Profile Systems

Assuming the 90 days trading horizon Cenergy Holdings SA is expected to generate 1.25 times more return on investment than Profile Systems. However, Cenergy Holdings is 1.25 times more volatile than Profile Systems Software. It trades about 0.38 of its potential returns per unit of risk. Profile Systems Software is currently generating about 0.02 per unit of risk. If you would invest  900.00  in Cenergy Holdings SA on October 9, 2024 and sell it today you would earn a total of  55.00  from holding Cenergy Holdings SA or generate 6.11% return on investment over 90 days.

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

Cenergy Holdings SA  vs.  Profile Systems Software

Cenergy Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cenergy Holdings SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cenergy Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Profile Systems Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profile Systems Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Profile Systems is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cenergy Holdings and Profile Systems

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

The idea behind Cenergy Holdings SA and Profile Systems Software 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.