Correlation Between Energisa and Accenture Plc

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

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

Diversification Opportunities for Energisa and Accenture Plc

-0.26

Correlation Coefficient

Energisa  Accenture Plc

Very good diversification

The 3 months correlation between Energisa and Accenture is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Energisa 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 Energisa SA are associated (or correlated) with Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Energisa i.e., Energisa and Accenture Plc go up and down completely randomly.

Pair Corralation between Energisa and Accenture Plc

Assuming the 90 days trading horizon Energisa SA is expected to generate 1.32 times more return on investment than Accenture Plc. However, Energisa is 1.32 times more volatile than Accenture plc. It trades about 0.03 of its potential returns per unit of risk. Accenture plc is currently generating about -0.04 per unit of risk. If you would invest  3,944  in Energisa SA on December 1, 2024 and sell it today you would earn a total of  107.00  from holding Energisa SA or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.93%
Values	Daily Returns

Energisa SA  vs.  Accenture plc

Energisa SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energisa SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Energisa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Accenture plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accenture plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Accenture Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Energisa and Accenture Plc

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

The idea behind Energisa SA and Accenture plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.