Correlation Between Generic Sweden and Enea AB

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

By analyzing existing cross correlation between Generic Sweden publ and Enea AB, you can compare the effects of market volatilities on Generic Sweden and Enea AB 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 Generic Sweden with a short position of Enea AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and Enea AB.

Diversification Opportunities for Generic Sweden and Enea AB

-0.21

Correlation Coefficient

Generic Sweden  Enea AB

Very good diversification

The 3 months correlation between Generic and Enea is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and Enea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enea AB and Generic Sweden 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 Generic Sweden publ are associated (or correlated) with Enea AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enea AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and Enea AB go up and down completely randomly.

Pair Corralation between Generic Sweden and Enea AB

Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 1.27 times more return on investment than Enea AB. However, Generic Sweden is 1.27 times more volatile than Enea AB. It trades about 0.05 of its potential returns per unit of risk. Enea AB is currently generating about -0.13 per unit of risk. If you would invest  5,500  in Generic Sweden publ on December 30, 2024 and sell it today you would earn a total of  380.00  from holding Generic Sweden publ or generate 6.91% return on investment over 90 days.

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

Generic Sweden publ  vs.  Enea AB

Generic Sweden publ

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Generic Sweden may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Enea AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enea AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Generic Sweden and Enea AB

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

The idea behind Generic Sweden publ and Enea AB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.