Correlation Between Enersys and SoftBrands

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

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

Diversification Opportunities for Enersys and SoftBrands

0.0

Correlation Coefficient

Enersys  SoftBrands

Pay attention - limited upside

The 3 months correlation between Enersys and SoftBrands is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and SoftBrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBrands and Enersys 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 Enersys are associated (or correlated) with SoftBrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBrands has no effect on the direction of Enersys i.e., Enersys and SoftBrands go up and down completely randomly.

Pair Corralation between Enersys and SoftBrands

If you would invest  0.00  in SoftBrands on October 8, 2024 and sell it today you would earn a total of  0.00  from holding SoftBrands or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Enersys  vs.  SoftBrands

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

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

SoftBrands

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enersys and SoftBrands

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

The idea behind Enersys and SoftBrands 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.