Correlation Between Enersize and Embellence Group

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

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

Diversification Opportunities for Enersize and Embellence Group

0.63

Correlation Coefficient

Enersize  Embellence Group

Poor diversification

The 3 months correlation between Enersize and Embellence is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Enersize Oy and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group and Enersize 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 Enersize Oy are associated (or correlated) with Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of Enersize i.e., Enersize and Embellence Group go up and down completely randomly.

Pair Corralation between Enersize and Embellence Group

Assuming the 90 days trading horizon Enersize Oy is expected to under-perform the Embellence Group. In addition to that, Enersize is 2.79 times more volatile than Embellence Group AB. It trades about -0.24 of its total potential returns per unit of risk. Embellence Group AB is currently generating about 0.01 per unit of volatility. If you would invest  3,020  in Embellence Group AB on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Embellence Group AB or generate 0.0% return on investment over 90 days.

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

Enersize Oy  vs.  Embellence Group AB

Enersize Oy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersize Oy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Embellence Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embellence Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Embellence Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enersize and Embellence Group

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

The idea behind Enersize Oy and Embellence Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.