Correlation Between Enfusion and Cadre Holdings

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

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

Diversification Opportunities for Enfusion and Cadre Holdings

-0.29

Correlation Coefficient

Enfusion  Cadre Holdings

Very good diversification

The 3 months correlation between Enfusion and Cadre is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings and Enfusion 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 Enfusion are associated (or correlated) with Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of Enfusion i.e., Enfusion and Cadre Holdings go up and down completely randomly.

Pair Corralation between Enfusion and Cadre Holdings

Given the investment horizon of 90 days Enfusion is expected to generate 1.33 times less return on investment than Cadre Holdings. But when comparing it to its historical volatility, Enfusion is 1.03 times less risky than Cadre Holdings. It trades about 0.02 of its potential returns per unit of risk. Cadre Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,203  in Cadre Holdings on September 4, 2024 and sell it today you would earn a total of  266.00  from holding Cadre Holdings or generate 8.3% return on investment over 90 days.

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

Enfusion  vs.  Cadre Holdings

Enfusion

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Cadre Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadre Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cadre Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enfusion and Cadre Holdings

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

The idea behind Enfusion and Cadre Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.