Correlation Between Enerflex and Secure Energy

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

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

Diversification Opportunities for Enerflex and Secure Energy

0.66

Correlation Coefficient

Enerflex  Secure Energy

Poor diversification

The 3 months correlation between Enerflex and Secure is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Secure Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Energy Services and Enerflex 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 Enerflex are associated (or correlated) with Secure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Energy Services has no effect on the direction of Enerflex i.e., Enerflex and Secure Energy go up and down completely randomly.

Pair Corralation between Enerflex and Secure Energy

Assuming the 90 days trading horizon Enerflex is expected to under-perform the Secure Energy. In addition to that, Enerflex is 1.49 times more volatile than Secure Energy Services. It trades about -0.17 of its total potential returns per unit of risk. Secure Energy Services is currently generating about 0.0 per unit of volatility. If you would invest  1,594  in Secure Energy Services on December 30, 2024 and sell it today you would lose (10.00) from holding Secure Energy Services or give up 0.63% of portfolio value over 90 days.

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

Enerflex  vs.  Secure Energy Services

Enerflex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enerflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Secure Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Secure Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Secure Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enerflex and Secure Energy

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

The idea behind Enerflex and Secure Energy Services 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.