Correlation Between ENCE Energa and Unicaja Banco

Can any of the company-specific risk be diversified away by investing in both ENCE Energa and Unicaja Banco 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 Unicaja Banco 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 Unicaja Banco SA, you can compare the effects of market volatilities on ENCE Energa and Unicaja Banco 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 Unicaja Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENCE Energa and Unicaja Banco.

Diversification Opportunities for ENCE Energa and Unicaja Banco

0.65

Correlation Coefficient

ENCE Energa  Unicaja Banco

Poor diversification

The 3 months correlation between ENCE and Unicaja is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ENCE Energa y and Unicaja Banco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicaja Banco 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 Unicaja Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicaja Banco SA has no effect on the direction of ENCE Energa i.e., ENCE Energa and Unicaja Banco go up and down completely randomly.

Pair Corralation between ENCE Energa and Unicaja Banco

Assuming the 90 days trading horizon ENCE Energa y is expected to generate 1.95 times more return on investment than Unicaja Banco. However, ENCE Energa is 1.95 times more volatile than Unicaja Banco SA. It trades about 0.36 of its potential returns per unit of risk. Unicaja Banco SA is currently generating about 0.29 per unit of risk. If you would invest  301.00  in ENCE Energa y on October 20, 2024 and sell it today you would earn a total of  36.00  from holding ENCE Energa y or generate 11.96% return on investment over 90 days.

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

ENCE Energa y  vs.  Unicaja Banco SA

ENCE Energa y

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENCE Energa y are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ENCE Energa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Unicaja Banco SA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Unicaja Banco SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Unicaja Banco exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENCE Energa and Unicaja Banco

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

The idea behind ENCE Energa y and Unicaja Banco 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.