Correlation Between Enjoei SA and Etsy

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

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

Diversification Opportunities for Enjoei SA and Etsy

0.45

Correlation Coefficient

Enjoei SA  Etsy

Very weak diversification

The 3 months correlation between Enjoei and Etsy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Enjoei SA and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc and Enjoei 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 Enjoei SA are associated (or correlated) with Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Enjoei SA i.e., Enjoei SA and Etsy go up and down completely randomly.

Pair Corralation between Enjoei SA and Etsy

Assuming the 90 days trading horizon Enjoei SA is expected to under-perform the Etsy. In addition to that, Enjoei SA is 2.09 times more volatile than Etsy Inc. It trades about -0.09 of its total potential returns per unit of risk. Etsy Inc is currently generating about -0.01 per unit of volatility. If you would invest  2,058  in Etsy Inc on September 5, 2024 and sell it today you would lose (42.00) from holding Etsy Inc or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Enjoei SA  vs.  Etsy Inc

Enjoei SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enjoei 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.

Etsy Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enjoei SA and Etsy

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

The idea behind Enjoei SA and Etsy Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.