Correlation Between ENEL Societa and AES

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

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

Diversification Opportunities for ENEL Societa and AES

0.26

Correlation Coefficient

ENEL Societa  AES

Modest diversification

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

Pair Corralation between ENEL Societa and AES

Assuming the 90 days horizon ENEL Societa per is expected to generate 0.4 times more return on investment than AES. However, ENEL Societa per is 2.51 times less risky than AES. It trades about 0.19 of its potential returns per unit of risk. The AES is currently generating about 0.01 per unit of risk. If you would invest  686.00  in ENEL Societa per on December 26, 2024 and sell it today you would earn a total of  92.00  from holding ENEL Societa per or generate 13.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ENEL Societa per  vs.  The AES

ENEL Societa per

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENEL Societa per are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ENEL Societa showed solid returns over the last few months and may actually be approaching a breakup point.

AES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, AES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ENEL Societa and AES

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

The idea behind ENEL Societa per and The AES 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.