Correlation Between Flux Power and Enersys

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

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

Diversification Opportunities for Flux Power and Enersys

0.22

Correlation Coefficient

Flux Power  Enersys

Modest diversification

The 3 months correlation between Flux and Enersys is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Flux Power 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 Flux Power Holdings are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Flux Power i.e., Flux Power and Enersys go up and down completely randomly.

Pair Corralation between Flux Power and Enersys

Given the investment horizon of 90 days Flux Power Holdings is expected to under-perform the Enersys. In addition to that, Flux Power is 3.38 times more volatile than Enersys. It trades about -0.11 of its total potential returns per unit of risk. Enersys is currently generating about 0.01 per unit of volatility. If you would invest  9,962  in Enersys on November 19, 2024 and sell it today you would lose (29.00) from holding Enersys or give up 0.29% of portfolio value over 90 days.

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

Flux Power Holdings  vs.  Enersys

Flux Power Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flux Power Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Enersys

Risk-Adjusted Performance

Modest

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

Pair Trading with Flux Power and Enersys

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

The idea behind Flux Power Holdings and Enersys 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.