Correlation Between Enags SA and Pescanova

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

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

Diversification Opportunities for Enags SA and Pescanova

0.5

Correlation Coefficient

Enags SA  Pescanova

Very weak diversification

The 3 months correlation between Enags and Pescanova is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Enags SA and Pescanova SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pescanova SA and Enags SA 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 Enags SA are associated (or correlated) with Pescanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pescanova SA has no effect on the direction of Enags SA i.e., Enags SA and Pescanova go up and down completely randomly.

Pair Corralation between Enags SA and Pescanova

Assuming the 90 days trading horizon Enags SA is expected to generate 2.55 times less return on investment than Pescanova. But when comparing it to its historical volatility, Enags SA is 3.6 times less risky than Pescanova. It trades about 0.01 of its potential returns per unit of risk. Pescanova SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Pescanova SA on December 2, 2024 and sell it today you would lose (4.00) from holding Pescanova SA or give up 10.53% of portfolio value over 90 days.

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

Enags SA  vs.  Pescanova SA

Enags SA

Risk-Adjusted Performance

Very Weak

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

Pescanova SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Enags SA and Pescanova

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

The idea behind Enags SA and Pescanova SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.