Correlation Between Global X and Enghouse Systems

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

By analyzing existing cross correlation between Global X Active and Enghouse Systems, you can compare the effects of market volatilities on Global X and Enghouse Systems 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 Global X with a short position of Enghouse Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Enghouse Systems.

Diversification Opportunities for Global X and Enghouse Systems

0.4

Correlation Coefficient

Global X  Enghouse Systems

Very weak diversification

The 3 months correlation between Global and Enghouse is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and Enghouse Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems and Global X 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 Global X Active are associated (or correlated) with Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of Global X i.e., Global X and Enghouse Systems go up and down completely randomly.

Pair Corralation between Global X and Enghouse Systems

Assuming the 90 days trading horizon Global X Active is expected to generate 0.42 times more return on investment than Enghouse Systems. However, Global X Active is 2.38 times less risky than Enghouse Systems. It trades about 0.03 of its potential returns per unit of risk. Enghouse Systems is currently generating about -0.07 per unit of risk. If you would invest  961.00  in Global X Active on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Global X Active or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Global X Active  vs.  Enghouse Systems

Global X Active

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Active are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Enghouse Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enghouse Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and Enghouse Systems

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

The idea behind Global X Active and Enghouse Systems 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.