Correlation Between Enter Air and ADX

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

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

Diversification Opportunities for Enter Air and ADX

-0.2

Correlation Coefficient

Enter Air  ADX

Good diversification

The 3 months correlation between Enter and ADX is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX and Enter Air 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 Enter Air SA are associated (or correlated) with ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Enter Air i.e., Enter Air and ADX go up and down completely randomly.

Pair Corralation between Enter Air and ADX

Assuming the 90 days trading horizon Enter Air SA is expected to generate 0.57 times more return on investment than ADX. However, Enter Air SA is 1.74 times less risky than ADX. It trades about 0.0 of its potential returns per unit of risk. ADX is currently generating about -0.05 per unit of risk. If you would invest  6,040  in Enter Air SA on August 31, 2024 and sell it today you would lose (50.00) from holding Enter Air SA or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.65%
Values	Daily Returns

Enter Air SA  vs.  ADX

Enter Air SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enter Air SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Enter Air is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ADX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADX has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Enter Air and ADX

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

The idea behind Enter Air SA and ADX 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.