Correlation Between ENCE Energa and Deoleo SA

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

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

Diversification Opportunities for ENCE Energa and Deoleo SA

0.19

Correlation Coefficient

ENCE Energa  Deoleo SA

Average diversification

The 3 months correlation between ENCE and Deoleo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Deoleo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deoleo SA and ENCE Energa 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 ENCE Energa y are associated (or correlated) with Deoleo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deoleo SA has no effect on the direction of ENCE Energa i.e., ENCE Energa and Deoleo SA go up and down completely randomly.

Pair Corralation between ENCE Energa and Deoleo SA

Assuming the 90 days trading horizon ENCE Energa y is expected to generate 0.54 times more return on investment than Deoleo SA. However, ENCE Energa y is 1.85 times less risky than Deoleo SA. It trades about 0.05 of its potential returns per unit of risk. Deoleo SA is currently generating about 0.01 per unit of risk. If you would invest  310.00  in ENCE Energa y on December 29, 2024 and sell it today you would earn a total of  11.00  from holding ENCE Energa y or generate 3.55% return on investment over 90 days.

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

ENCE Energa y  vs.  Deoleo SA

ENCE Energa y

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENCE Energa y are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, ENCE Energa is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Deoleo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deoleo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Deoleo SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ENCE Energa and Deoleo SA

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

The idea behind ENCE Energa y and Deoleo SA 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.