Correlation Between Enfusion and Cleartronic

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

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

Diversification Opportunities for Enfusion and Cleartronic

0.69

Correlation Coefficient

Enfusion  Cleartronic

Poor diversification

The 3 months correlation between Enfusion and Cleartronic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Cleartronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleartronic 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 Cleartronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleartronic has no effect on the direction of Enfusion i.e., Enfusion and Cleartronic go up and down completely randomly.

Pair Corralation between Enfusion and Cleartronic

Given the investment horizon of 90 days Enfusion is expected to generate 1.58 times less return on investment than Cleartronic. But when comparing it to its historical volatility, Enfusion is 1.71 times less risky than Cleartronic. It trades about 0.11 of its potential returns per unit of risk. Cleartronic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.05  in Cleartronic on October 10, 2024 and sell it today you would earn a total of  0.22  from holding Cleartronic or generate 20.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Enfusion  vs.  Cleartronic

Enfusion

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 8 (%) 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.

Cleartronic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cleartronic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Cleartronic demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enfusion and Cleartronic

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

The idea behind Enfusion and Cleartronic 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..