Correlation Between Enagas SA and Beijing Enterprises

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

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

Diversification Opportunities for Enagas SA and Beijing Enterprises

-0.39

Correlation Coefficient

Enagas SA  Beijing Enterprises

Very good diversification

The 3 months correlation between Enagas and Beijing is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Enagas SA and Beijing Enterprises Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enterprises Water and Enagas 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 Enagas SA are associated (or correlated) with Beijing Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enterprises Water has no effect on the direction of Enagas SA i.e., Enagas SA and Beijing Enterprises go up and down completely randomly.

Pair Corralation between Enagas SA and Beijing Enterprises

Assuming the 90 days horizon Enagas SA is expected to generate 0.59 times more return on investment than Beijing Enterprises. However, Enagas SA is 1.69 times less risky than Beijing Enterprises. It trades about 0.22 of its potential returns per unit of risk. Beijing Enterprises Water is currently generating about -0.09 per unit of risk. If you would invest  601.00  in Enagas SA on December 30, 2024 and sell it today you would earn a total of  114.00  from holding Enagas SA or generate 18.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Enagas SA  vs.  Beijing Enterprises Water

Enagas SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enagas SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Enagas SA showed solid returns over the last few months and may actually be approaching a breakup point.

Beijing Enterprises Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing Enterprises Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Enagas SA and Beijing Enterprises

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

The idea behind Enagas SA and Beijing Enterprises Water 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.