Correlation Between EGain and Enfusion

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

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

Diversification Opportunities for EGain and Enfusion

0.18

Correlation Coefficient

EGain  Enfusion

Average diversification

The 3 months correlation between EGain and Enfusion is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding eGain and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and EGain 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 eGain are associated (or correlated) with Enfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enfusion has no effect on the direction of EGain i.e., EGain and Enfusion go up and down completely randomly.

Pair Corralation between EGain and Enfusion

Given the investment horizon of 90 days eGain is expected to under-perform the Enfusion. In addition to that, EGain is 2.15 times more volatile than Enfusion. It trades about 0.0 of its total potential returns per unit of risk. Enfusion is currently generating about 0.12 per unit of volatility. If you would invest  994.00  in Enfusion on November 29, 2024 and sell it today you would earn a total of  138.50  from holding Enfusion or generate 13.93% return on investment over 90 days.

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

eGain  vs.  Enfusion

eGain

Risk-Adjusted Performance

Very Weak

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

Enfusion

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EGain and Enfusion

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

The idea behind eGain and Enfusion 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.