Correlation Between Cenergy Holdings and Elia Group

Can any of the company-specific risk be diversified away by investing in both Cenergy Holdings and Elia 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 Cenergy Holdings and Elia Group 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 Elia Group SANV, you can compare the effects of market volatilities on Cenergy Holdings and Elia 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 Cenergy Holdings with a short position of Elia Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenergy Holdings and Elia Group.

Diversification Opportunities for Cenergy Holdings and Elia Group

-0.13

Correlation Coefficient

Cenergy Holdings  Elia Group

Good diversification

The 3 months correlation between Cenergy and Elia is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cenergy Holdings SA and Elia Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elia Group SANV 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 Elia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elia Group SANV has no effect on the direction of Cenergy Holdings i.e., Cenergy Holdings and Elia Group go up and down completely randomly.

Pair Corralation between Cenergy Holdings and Elia Group

Assuming the 90 days trading horizon Cenergy Holdings is expected to generate 5.52 times less return on investment than Elia Group. But when comparing it to its historical volatility, Cenergy Holdings SA is 1.97 times less risky than Elia Group. It trades about 0.04 of its potential returns per unit of risk. Elia Group SANV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,802  in Elia Group SANV on December 30, 2024 and sell it today you would earn a total of  1,373  from holding Elia Group SANV or generate 20.19% return on investment over 90 days.

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

Cenergy Holdings SA  vs.  Elia Group SANV

Cenergy Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cenergy Holdings SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Cenergy Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Elia Group SANV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elia Group SANV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Elia Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cenergy Holdings and Elia Group

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

The idea behind Cenergy Holdings SA and Elia Group SANV 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.