Correlation Between Enzo Biochem and Fonar

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

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

Diversification Opportunities for Enzo Biochem and Fonar

0.24

Correlation Coefficient

Enzo Biochem  Fonar

Modest diversification

The 3 months correlation between Enzo and Fonar is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Enzo Biochem and Fonar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonar and Enzo Biochem 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 Enzo Biochem are associated (or correlated) with Fonar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonar has no effect on the direction of Enzo Biochem i.e., Enzo Biochem and Fonar go up and down completely randomly.

Pair Corralation between Enzo Biochem and Fonar

Considering the 90-day investment horizon Enzo Biochem is expected to under-perform the Fonar. In addition to that, Enzo Biochem is 2.91 times more volatile than Fonar. It trades about -0.23 of its total potential returns per unit of risk. Fonar is currently generating about -0.11 per unit of volatility. If you would invest  1,647  in Fonar on November 28, 2024 and sell it today you would lose (191.00) from holding Fonar or give up 11.6% of portfolio value over 90 days.

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

Enzo Biochem  vs.  Fonar

Enzo Biochem

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enzo Biochem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fonar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fonar 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 Enzo Biochem and Fonar

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

The idea behind Enzo Biochem and Fonar 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.