Correlation Between Enea AB and NCAB

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

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

Diversification Opportunities for Enea AB and NCAB

-0.11

Correlation Coefficient

Enea AB  NCAB

Good diversification

The 3 months correlation between Enea and NCAB is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Enea AB and NCAB Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCAB Group and Enea AB 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 Enea AB are associated (or correlated) with NCAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCAB Group has no effect on the direction of Enea AB i.e., Enea AB and NCAB go up and down completely randomly.

Pair Corralation between Enea AB and NCAB

Assuming the 90 days trading horizon Enea AB is expected to generate 11.66 times less return on investment than NCAB. But when comparing it to its historical volatility, Enea AB is 1.11 times less risky than NCAB. It trades about 0.02 of its potential returns per unit of risk. NCAB Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,845  in NCAB Group on September 24, 2024 and sell it today you would earn a total of  545.00  from holding NCAB Group or generate 9.32% return on investment over 90 days.

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

Enea AB  vs.  NCAB Group

Enea AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enea AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Enea AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NCAB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Enea AB and NCAB

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

The idea behind Enea AB and NCAB Group 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.