Correlation Between Enersys and Supercom

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

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

Diversification Opportunities for Enersys and Supercom

0.37

Correlation Coefficient

Enersys  Supercom

Weak diversification

The 3 months correlation between Enersys and Supercom is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom 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 Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Enersys i.e., Enersys and Supercom go up and down completely randomly.

Pair Corralation between Enersys and Supercom

Considering the 90-day investment horizon Enersys is expected to generate 43.72 times less return on investment than Supercom. But when comparing it to its historical volatility, Enersys is 7.38 times less risky than Supercom. It trades about 0.01 of its potential returns per unit of risk. Supercom is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  595.00  in Supercom on December 29, 2024 and sell it today you would earn a total of  135.00  from holding Supercom or generate 22.69% return on investment over 90 days.

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

Enersys  vs.  Supercom

Enersys

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enersys are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Supercom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enersys and Supercom

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

The idea behind Enersys and Supercom 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.