Correlation Between Enea AB and Upsales Technology

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

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

Diversification Opportunities for Enea AB and Upsales Technology

-0.72

Correlation Coefficient

Enea AB  Upsales Technology

Pay attention - limited upside

The 3 months correlation between Enea and Upsales is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Enea AB and Upsales Technology AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upsales Technology 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 Upsales Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upsales Technology has no effect on the direction of Enea AB i.e., Enea AB and Upsales Technology go up and down completely randomly.

Pair Corralation between Enea AB and Upsales Technology

Assuming the 90 days trading horizon Enea AB is expected to generate 0.93 times more return on investment than Upsales Technology. However, Enea AB is 1.08 times less risky than Upsales Technology. It trades about 0.14 of its potential returns per unit of risk. Upsales Technology AB is currently generating about -0.08 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  1,550  from holding Enea AB or generate 18.17% return on investment over 90 days.

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

Enea AB  vs.  Upsales Technology AB

Enea AB

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enea AB are ranked lower than 11 (%) 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.

Upsales Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Upsales Technology AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Enea AB and Upsales Technology

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

The idea behind Enea AB and Upsales Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.