Correlation Between Enersize and SECITS Holding

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

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

Diversification Opportunities for Enersize and SECITS Holding

-0.02

Correlation Coefficient

Enersize  SECITS Holding

Good diversification

The 3 months correlation between Enersize and SECITS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Enersize Oy and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding AB 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 SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Enersize i.e., Enersize and SECITS Holding go up and down completely randomly.

Pair Corralation between Enersize and SECITS Holding

Assuming the 90 days trading horizon Enersize Oy is expected to under-perform the SECITS Holding. But the stock apears to be less risky and, when comparing its historical volatility, Enersize Oy is 1.15 times less risky than SECITS Holding. The stock trades about -0.07 of its potential returns per unit of risk. The SECITS Holding AB is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1.60  in SECITS Holding AB on September 12, 2024 and sell it today you would earn a total of  1.28  from holding SECITS Holding AB or generate 80.0% return on investment over 90 days.

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

Enersize Oy  vs.  SECITS Holding 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 comparatively stable basic indicators, Enersize is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SECITS Holding AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SECITS Holding AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECITS Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enersize and SECITS Holding

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

The idea behind Enersize Oy and SECITS Holding 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.