Correlation Between Enghouse Systems and Savaria

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

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

Diversification Opportunities for Enghouse Systems and Savaria

-0.09

Correlation Coefficient

Enghouse Systems  Savaria

Good diversification

The 3 months correlation between Enghouse and Savaria is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enghouse Systems and Savaria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Savaria and Enghouse Systems 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 Enghouse Systems are associated (or correlated) with Savaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Savaria has no effect on the direction of Enghouse Systems i.e., Enghouse Systems and Savaria go up and down completely randomly.

Pair Corralation between Enghouse Systems and Savaria

Assuming the 90 days trading horizon Enghouse Systems is expected to generate 0.77 times more return on investment than Savaria. However, Enghouse Systems is 1.3 times less risky than Savaria. It trades about 0.09 of its potential returns per unit of risk. Savaria is currently generating about -0.08 per unit of risk. If you would invest  3,033  in Enghouse Systems on September 13, 2024 and sell it today you would earn a total of  93.00  from holding Enghouse Systems or generate 3.07% return on investment over 90 days.

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

Enghouse Systems  vs.  Savaria

Enghouse Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enghouse Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Savaria

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enghouse Systems and Savaria

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

The idea behind Enghouse Systems and Savaria 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.