Correlation Between Eniro AB and G5 Entertainment

Can any of the company-specific risk be diversified away by investing in both Eniro AB and G5 Entertainment 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 Eniro AB and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eniro AB and G5 Entertainment publ, you can compare the effects of market volatilities on Eniro AB and G5 Entertainment 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 Eniro AB with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eniro AB and G5 Entertainment.

Diversification Opportunities for Eniro AB and G5 Entertainment

0.54

Correlation Coefficient

Eniro AB  G5 Entertainment

Very weak diversification

The 3 months correlation between Eniro and G5EN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eniro AB and G5 Entertainment publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment publ and Eniro AB 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 Eniro AB are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment publ has no effect on the direction of Eniro AB i.e., Eniro AB and G5 Entertainment go up and down completely randomly.

Pair Corralation between Eniro AB and G5 Entertainment

Assuming the 90 days trading horizon Eniro AB is expected to generate 1.18 times more return on investment than G5 Entertainment. However, Eniro AB is 1.18 times more volatile than G5 Entertainment publ. It trades about -0.01 of its potential returns per unit of risk. G5 Entertainment publ is currently generating about -0.03 per unit of risk. If you would invest  57.00  in Eniro AB on October 5, 2024 and sell it today you would lose (12.00) from holding Eniro AB or give up 21.05% of portfolio value over 90 days.

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

Eniro AB  vs.  G5 Entertainment publ

Eniro AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eniro AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eniro AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

G5 Entertainment publ

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days G5 Entertainment publ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eniro AB and G5 Entertainment

The main advantage of trading using opposite Eniro AB and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eniro AB position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.

The idea behind Eniro AB and G5 Entertainment publ 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.