Correlation Between Kunlun Energy and Eneos Holdings

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

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

Diversification Opportunities for Kunlun Energy and Eneos Holdings

0.08

Correlation Coefficient

Kunlun Energy  Eneos Holdings

Significant diversification

The 3 months correlation between Kunlun and Eneos is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kunlun Energy Co and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR and Kunlun Energy 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 Kunlun Energy Co are associated (or correlated) with Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of Kunlun Energy i.e., Kunlun Energy and Eneos Holdings go up and down completely randomly.

Pair Corralation between Kunlun Energy and Eneos Holdings

Assuming the 90 days horizon Kunlun Energy Co is expected to under-perform the Eneos Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kunlun Energy Co is 2.21 times less risky than Eneos Holdings. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Eneos Holdings ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  999.00  in Eneos Holdings ADR on October 27, 2024 and sell it today you would earn a total of  4.00  from holding Eneos Holdings ADR or generate 0.4% return on investment over 90 days.

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

Kunlun Energy Co  vs.  Eneos Holdings ADR

Kunlun Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kunlun Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eneos Holdings ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Eneos Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kunlun Energy and Eneos Holdings

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

The idea behind Kunlun Energy Co and Eneos Holdings ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.