Correlation Between ALERION CLEANPOWER and ENN Energy

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

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

Diversification Opportunities for ALERION CLEANPOWER and ENN Energy

0.41

Correlation Coefficient

ALERION CLEANPOWER  ENN Energy

Very weak diversification

The 3 months correlation between ALERION and ENN is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and ENN Energy go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and ENN Energy

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the ENN Energy. In addition to that, ALERION CLEANPOWER is 1.0 times more volatile than ENN Energy Holdings. It trades about -0.17 of its total potential returns per unit of risk. ENN Energy Holdings is currently generating about -0.06 per unit of volatility. If you would invest  685.00  in ENN Energy Holdings on October 11, 2024 and sell it today you would lose (15.00) from holding ENN Energy Holdings or give up 2.19% of portfolio value over 90 days.

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

ALERION CLEANPOWER  vs.  ENN Energy Holdings

ALERION CLEANPOWER

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALERION CLEANPOWER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ENN Energy Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and ENN Energy

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

The idea behind ALERION CLEANPOWER and ENN Energy Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.