Correlation Between Enjoy SA and Nitratos

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

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

Diversification Opportunities for Enjoy SA and Nitratos

0.55

Correlation Coefficient

Enjoy SA  Nitratos

Very weak diversification

The 3 months correlation between Enjoy and Nitratos is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Enjoy SA and Nitratos de Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitratos de Chile and Enjoy 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 Enjoy SA are associated (or correlated) with Nitratos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitratos de Chile has no effect on the direction of Enjoy SA i.e., Enjoy SA and Nitratos go up and down completely randomly.

Pair Corralation between Enjoy SA and Nitratos

Assuming the 90 days trading horizon Enjoy SA is expected to under-perform the Nitratos. In addition to that, Enjoy SA is 2.52 times more volatile than Nitratos de Chile. It trades about -0.22 of its total potential returns per unit of risk. Nitratos de Chile is currently generating about -0.07 per unit of volatility. If you would invest  250.00  in Nitratos de Chile on September 13, 2024 and sell it today you would lose (15.00) from holding Nitratos de Chile or give up 6.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Enjoy SA  vs.  Nitratos de Chile

Enjoy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enjoy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nitratos de Chile

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enjoy SA and Nitratos

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

The idea behind Enjoy SA and Nitratos de Chile 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.