Correlation Between Ennis and Konica Minolta

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

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

Diversification Opportunities for Ennis and Konica Minolta

0.08

Correlation Coefficient

Ennis  Konica Minolta

Significant diversification

The 3 months correlation between Ennis and Konica is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ennis Inc and Konica Minolta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konica Minolta and Ennis 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 Ennis Inc are associated (or correlated) with Konica Minolta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konica Minolta has no effect on the direction of Ennis i.e., Ennis and Konica Minolta go up and down completely randomly.

Pair Corralation between Ennis and Konica Minolta

Considering the 90-day investment horizon Ennis is expected to generate 5.33 times less return on investment than Konica Minolta. But when comparing it to its historical volatility, Ennis Inc is 2.63 times less risky than Konica Minolta. It trades about 0.02 of its potential returns per unit of risk. Konica Minolta is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  301.00  in Konica Minolta on September 23, 2024 and sell it today you would earn a total of  141.00  from holding Konica Minolta or generate 46.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.62%
Values	Daily Returns

Ennis Inc  vs.  Konica Minolta

Ennis Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ennis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Ennis is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Konica Minolta

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Konica Minolta are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Konica Minolta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ennis and Konica Minolta

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

The idea behind Ennis Inc and Konica Minolta 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.