Correlation Between GPS Participaes and Enjoei SA

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

By analyzing existing cross correlation between GPS Participaes e and Enjoei SA, you can compare the effects of market volatilities on GPS Participaes and Enjoei SA 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 GPS Participaes with a short position of Enjoei SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPS Participaes and Enjoei SA.

Diversification Opportunities for GPS Participaes and Enjoei SA

0.53

Correlation Coefficient

GPS Participaes  Enjoei SA

Very weak diversification

The 3 months correlation between GPS and Enjoei is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GPS Participaes e and Enjoei SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enjoei SA and GPS Participaes 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 GPS Participaes e are associated (or correlated) with Enjoei SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enjoei SA has no effect on the direction of GPS Participaes i.e., GPS Participaes and Enjoei SA go up and down completely randomly.

Pair Corralation between GPS Participaes and Enjoei SA

Assuming the 90 days trading horizon GPS Participaes is expected to generate 17.26 times less return on investment than Enjoei SA. But when comparing it to its historical volatility, GPS Participaes e is 1.9 times less risky than Enjoei SA. It trades about 0.0 of its potential returns per unit of risk. Enjoei SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Enjoei SA on December 30, 2024 and sell it today you would lose (1.00) from holding Enjoei SA or give up 0.95% of portfolio value over 90 days.

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

GPS Participaes e  vs.  Enjoei SA

GPS Participaes e

Risk-Adjusted Performance

Very Weak

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

Enjoei SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enjoei SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enjoei SA 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 GPS Participaes and Enjoei SA

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

The idea behind GPS Participaes e and Enjoei SA 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.