Correlation Between Enorama Pharma and Serstech

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

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

Diversification Opportunities for Enorama Pharma and Serstech

-0.35

Correlation Coefficient

Enorama Pharma  Serstech

Very good diversification

The 3 months correlation between Enorama and Serstech is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Enorama Pharma AB and Serstech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serstech AB and Enorama Pharma 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 Enorama Pharma AB are associated (or correlated) with Serstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serstech AB has no effect on the direction of Enorama Pharma i.e., Enorama Pharma and Serstech go up and down completely randomly.

Pair Corralation between Enorama Pharma and Serstech

Assuming the 90 days trading horizon Enorama Pharma AB is expected to generate 1.25 times more return on investment than Serstech. However, Enorama Pharma is 1.25 times more volatile than Serstech AB. It trades about 0.11 of its potential returns per unit of risk. Serstech AB is currently generating about 0.08 per unit of risk. If you would invest  306.00  in Enorama Pharma AB on October 23, 2024 and sell it today you would earn a total of  25.00  from holding Enorama Pharma AB or generate 8.17% return on investment over 90 days.

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

Enorama Pharma AB  vs.  Serstech AB

Enorama Pharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enorama Pharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Serstech AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Serstech AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Serstech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enorama Pharma and Serstech

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

The idea behind Enorama Pharma AB and Serstech AB 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 Anywhere module to track or share privately all of your investments from the convenience of any device.