Correlation Between Eneraqua Technologies and Tatton Asset

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

Diversification Opportunities for Eneraqua Technologies and Tatton Asset

0.43

Correlation Coefficient

Eneraqua Technologies  Tatton Asset

Very weak diversification

The 3 months correlation between Eneraqua and Tatton is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eneraqua Technologies PLC and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Eneraqua Technologies i.e., Eneraqua Technologies and Tatton Asset go up and down completely randomly.

Pair Corralation between Eneraqua Technologies and Tatton Asset

Assuming the 90 days trading horizon Eneraqua Technologies PLC is expected to generate 1.12 times more return on investment than Tatton Asset. However, Eneraqua Technologies is 1.12 times more volatile than Tatton Asset Management. It trades about 0.12 of its potential returns per unit of risk. Tatton Asset Management is currently generating about -0.02 per unit of risk. If you would invest  3,950  in Eneraqua Technologies PLC on October 11, 2024 and sell it today you would earn a total of  150.00  from holding Eneraqua Technologies PLC or generate 3.8% return on investment over 90 days.

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

Eneraqua Technologies PLC  vs.  Tatton Asset Management

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.

Tatton Asset Management

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eneraqua Technologies and Tatton Asset

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

The idea behind Eneraqua Technologies PLC and Tatton Asset Management 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.