Correlation Between Eni SPA and PTL

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

By analyzing existing cross correlation between Eni SpA ADR and PTL LTD Ordinary, you can compare the effects of market volatilities on Eni SPA and PTL 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 Eni SPA with a short position of PTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eni SPA and PTL.

Diversification Opportunities for Eni SPA and PTL

-0.69

Correlation Coefficient

Eni SPA  PTL

Excellent diversification

The 3 months correlation between Eni and PTL is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and PTL LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTL LTD Ordinary and Eni SPA 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 Eni SpA ADR are associated (or correlated) with PTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTL LTD Ordinary has no effect on the direction of Eni SPA i.e., Eni SPA and PTL go up and down completely randomly.

Pair Corralation between Eni SPA and PTL

Taking into account the 90-day investment horizon Eni SpA ADR is expected to generate 0.07 times more return on investment than PTL. However, Eni SpA ADR is 13.73 times less risky than PTL. It trades about 0.15 of its potential returns per unit of risk. PTL LTD Ordinary is currently generating about -0.11 per unit of risk. If you would invest  2,726  in Eni SpA ADR on December 16, 2024 and sell it today you would earn a total of  272.00  from holding Eni SpA ADR or generate 9.98% return on investment over 90 days.

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

Eni SpA ADR  vs.  PTL LTD Ordinary

Eni SpA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eni SpA ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Eni SPA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PTL LTD Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTL LTD Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Eni SPA and PTL

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

The idea behind Eni SpA ADR and PTL LTD Ordinary 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.