Correlation Between Enfusion and ISign Solutions

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

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

Diversification Opportunities for Enfusion and ISign Solutions

-0.35

Correlation Coefficient

Enfusion  ISign Solutions

Very good diversification

The 3 months correlation between Enfusion and ISign is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and iSign Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Solutions 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 ISign Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Solutions has no effect on the direction of Enfusion i.e., Enfusion and ISign Solutions go up and down completely randomly.

Pair Corralation between Enfusion and ISign Solutions

Given the investment horizon of 90 days Enfusion is expected to generate 9.38 times less return on investment than ISign Solutions. But when comparing it to its historical volatility, Enfusion is 7.07 times less risky than ISign Solutions. It trades about 0.02 of its potential returns per unit of risk. iSign Solutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  32.00  in iSign Solutions on September 14, 2024 and sell it today you would lose (17.00) from holding iSign Solutions or give up 53.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.89%
Values	Daily Returns

Enfusion  vs.  iSign Solutions

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.

iSign Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSign Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ISign Solutions is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enfusion and ISign Solutions

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

The idea behind Enfusion and iSign Solutions 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.