Correlation Between Eneraqua Technologies and Fortuna Silver

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

By analyzing existing cross correlation between Eneraqua Technologies PLC and Fortuna Silver Mines, you can compare the effects of market volatilities on Eneraqua Technologies and Fortuna Silver 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 Eneraqua Technologies with a short position of Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneraqua Technologies and Fortuna Silver.

Diversification Opportunities for Eneraqua Technologies and Fortuna Silver

-0.49

Correlation Coefficient

Eneraqua Technologies  Fortuna Silver

Very good diversification

The 3 months correlation between Eneraqua and Fortuna is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eneraqua Technologies PLC and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines and Eneraqua Technologies 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 Eneraqua Technologies PLC are associated (or correlated) with Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Eneraqua Technologies i.e., Eneraqua Technologies and Fortuna Silver go up and down completely randomly.

Pair Corralation between Eneraqua Technologies and Fortuna Silver

Assuming the 90 days trading horizon Eneraqua Technologies PLC is expected to under-perform the Fortuna Silver. But the stock apears to be less risky and, when comparing its historical volatility, Eneraqua Technologies PLC is 1.78 times less risky than Fortuna Silver. The stock trades about -0.05 of its potential returns per unit of risk. The Fortuna Silver Mines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Fortuna Silver Mines on October 11, 2024 and sell it today you would earn a total of  143.00  from holding Fortuna Silver Mines or generate 28.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.81%
Values	Daily Returns

Eneraqua Technologies PLC  vs.  Fortuna Silver Mines

Eneraqua Technologies PLC

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneraqua Technologies PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Eneraqua Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fortuna Silver Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortuna Silver Mines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fortuna Silver is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eneraqua Technologies and Fortuna Silver

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

The idea behind Eneraqua Technologies PLC and Fortuna Silver Mines 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.