Correlation Between Enlight Renewable and Crown

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

By analyzing existing cross correlation between Enlight Renewable Energy and Crown Cork 7375, you can compare the effects of market volatilities on Enlight Renewable and Crown 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 Enlight Renewable with a short position of Crown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enlight Renewable and Crown.

Diversification Opportunities for Enlight Renewable and Crown

-0.05

Correlation Coefficient

Enlight Renewable  Crown

Good diversification

The 3 months correlation between Enlight and Crown is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Crown Cork 7375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Cork 7375 and Enlight Renewable 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 Enlight Renewable Energy are associated (or correlated) with Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Cork 7375 has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and Crown go up and down completely randomly.

Pair Corralation between Enlight Renewable and Crown

Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 4.37 times more return on investment than Crown. However, Enlight Renewable is 4.37 times more volatile than Crown Cork 7375. It trades about 0.16 of its potential returns per unit of risk. Crown Cork 7375 is currently generating about 0.04 per unit of risk. If you would invest  1,645  in Enlight Renewable Energy on October 8, 2024 and sell it today you would earn a total of  104.00  from holding Enlight Renewable Energy or generate 6.32% return on investment over 90 days.

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

Enlight Renewable Energy  vs.  Crown Cork 7375

Enlight Renewable Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Enlight Renewable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Crown Cork 7375

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Cork 7375 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crown is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enlight Renewable and Crown

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

The idea behind Enlight Renewable Energy and Crown Cork 7375 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.