Correlation Between Enea AB and Net Insight

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

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

Diversification Opportunities for Enea AB and Net Insight

0.18

Correlation Coefficient

Enea AB  Net Insight

Average diversification

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

Pair Corralation between Enea AB and Net Insight

Assuming the 90 days trading horizon Enea AB is expected to generate 0.95 times more return on investment than Net Insight. However, Enea AB is 1.05 times less risky than Net Insight. It trades about 0.12 of its potential returns per unit of risk. Net Insight AB is currently generating about 0.04 per unit of risk. If you would invest  8,530  in Enea AB on September 3, 2024 and sell it today you would earn a total of  1,300  from holding Enea AB or generate 15.24% return on investment over 90 days.

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

Enea AB  vs.  Net Insight AB

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.

Net Insight AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Net Insight AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Net Insight is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enea AB and Net Insight

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

The idea behind Enea AB and Net Insight AB 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.