Correlation Between Enter Air and Saule Technologies

Can any of the company-specific risk be diversified away by investing in both Enter Air and Saule Technologies 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 Saule Technologies 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 Saule Technologies SA, you can compare the effects of market volatilities on Enter Air and Saule Technologies 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 Saule Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enter Air and Saule Technologies.

Diversification Opportunities for Enter Air and Saule Technologies

0.84

Correlation Coefficient

Enter Air  Saule Technologies

Very poor diversification

The 3 months correlation between Enter and Saule is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and Saule Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saule Technologies 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 Saule Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saule Technologies has no effect on the direction of Enter Air i.e., Enter Air and Saule Technologies go up and down completely randomly.

Pair Corralation between Enter Air and Saule Technologies

Assuming the 90 days trading horizon Enter Air is expected to generate 5.06 times less return on investment than Saule Technologies. But when comparing it to its historical volatility, Enter Air SA is 3.79 times less risky than Saule Technologies. It trades about 0.16 of its potential returns per unit of risk. Saule Technologies SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Saule Technologies SA on December 20, 2024 and sell it today you would earn a total of  92.00  from holding Saule Technologies SA or generate 77.97% return on investment over 90 days.

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

Enter Air SA  vs.  Saule Technologies SA

Enter Air SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enter Air SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Enter Air reported solid returns over the last few months and may actually be approaching a breakup point.

Saule Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Saule Technologies SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Saule Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enter Air and Saule Technologies

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

The idea behind Enter Air SA and Saule Technologies SA 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.