Correlation Between Grupo Ecoener and Grupo Ezentis

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

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

Diversification Opportunities for Grupo Ecoener and Grupo Ezentis

-0.75

Correlation Coefficient

Grupo Ecoener  Grupo Ezentis

Pay attention - limited upside

The 3 months correlation between Grupo and Grupo is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Ecoener SA and Grupo Ezentis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Ezentis SA and Grupo Ecoener 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 Grupo Ecoener SA are associated (or correlated) with Grupo Ezentis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Ezentis SA has no effect on the direction of Grupo Ecoener i.e., Grupo Ecoener and Grupo Ezentis go up and down completely randomly.

Pair Corralation between Grupo Ecoener and Grupo Ezentis

Assuming the 90 days trading horizon Grupo Ecoener SA is expected to generate 0.37 times more return on investment than Grupo Ezentis. However, Grupo Ecoener SA is 2.71 times less risky than Grupo Ezentis. It trades about 0.06 of its potential returns per unit of risk. Grupo Ezentis SA is currently generating about 0.02 per unit of risk. If you would invest  426.00  in Grupo Ecoener SA on September 4, 2024 and sell it today you would earn a total of  8.00  from holding Grupo Ecoener SA or generate 1.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Grupo Ecoener SA  vs.  Grupo Ezentis SA

Grupo Ecoener SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Ecoener SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Grupo Ecoener exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grupo Ezentis SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Ezentis SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Grupo Ecoener and Grupo Ezentis

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

The idea behind Grupo Ecoener SA and Grupo Ezentis 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.