Correlation Between ESE Entertainment and Braille Energy

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

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

Diversification Opportunities for ESE Entertainment and Braille Energy

-0.3

Correlation Coefficient

ESE Entertainment  Braille Energy

Very good diversification

The 3 months correlation between ESE and Braille is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment and Braille Energy Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braille Energy Systems and ESE Entertainment 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 ESE Entertainment are associated (or correlated) with Braille Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braille Energy Systems has no effect on the direction of ESE Entertainment i.e., ESE Entertainment and Braille Energy go up and down completely randomly.

Pair Corralation between ESE Entertainment and Braille Energy

Assuming the 90 days horizon ESE Entertainment is expected to generate 3.27 times less return on investment than Braille Energy. In addition to that, ESE Entertainment is 1.07 times more volatile than Braille Energy Systems. It trades about 0.02 of its total potential returns per unit of risk. Braille Energy Systems is currently generating about 0.05 per unit of volatility. If you would invest  5.50  in Braille Energy Systems on December 28, 2024 and sell it today you would earn a total of  0.50  from holding Braille Energy Systems or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

ESE Entertainment  vs.  Braille Energy Systems

ESE Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ESE Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ESE Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Braille Energy Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Braille Energy Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Braille Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ESE Entertainment and Braille Energy

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

The idea behind ESE Entertainment and Braille Energy Systems 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..