Correlation Between Humble Group and Enad Global

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

By analyzing existing cross correlation between Humble Group AB and Enad Global 7, you can compare the effects of market volatilities on Humble Group and Enad Global 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 Humble Group with a short position of Enad Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humble Group and Enad Global.

Diversification Opportunities for Humble Group and Enad Global

0.42

Correlation Coefficient

Humble Group  Enad Global

Very weak diversification

The 3 months correlation between Humble and Enad is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Humble Group AB and Enad Global 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enad Global 7 and Humble Group 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 Humble Group AB are associated (or correlated) with Enad Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enad Global 7 has no effect on the direction of Humble Group i.e., Humble Group and Enad Global go up and down completely randomly.

Pair Corralation between Humble Group and Enad Global

Assuming the 90 days trading horizon Humble Group AB is expected to under-perform the Enad Global. In addition to that, Humble Group is 1.04 times more volatile than Enad Global 7. It trades about -0.03 of its total potential returns per unit of risk. Enad Global 7 is currently generating about 0.06 per unit of volatility. If you would invest  1,490  in Enad Global 7 on September 21, 2024 and sell it today you would earn a total of  132.00  from holding Enad Global 7 or generate 8.86% return on investment over 90 days.

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

Humble Group AB  vs.  Enad Global 7

Humble Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humble Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Humble Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Enad Global 7

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enad Global 7 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enad Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Humble Group and Enad Global

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

The idea behind Humble Group AB and Enad Global 7 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.