Correlation Between BII Railway and ENN ENERGY

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

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

Diversification Opportunities for BII Railway and ENN ENERGY

-0.03

Correlation Coefficient

BII Railway  ENN ENERGY

Good diversification

The 3 months correlation between BII and ENN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and ENN ENERGY go up and down completely randomly.

Pair Corralation between BII Railway and ENN ENERGY

Assuming the 90 days horizon BII Railway is expected to generate 1.71 times less return on investment than ENN ENERGY. But when comparing it to its historical volatility, BII Railway Transportation is 1.8 times less risky than ENN ENERGY. It trades about 0.06 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  606.00  in ENN ENERGY HLD on October 25, 2024 and sell it today you would earn a total of  54.00  from holding ENN ENERGY HLD or generate 8.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

BII Railway Transportation  vs.  ENN ENERGY HLD

BII Railway Transpor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BII Railway Transportation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BII Railway may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 BII Railway and ENN ENERGY

The main advantage of trading using opposite BII Railway and ENN ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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 BII Railway Transportation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.