Correlation Between Transport International and ENN Energy

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

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

Diversification Opportunities for Transport International and ENN Energy

-0.14

Correlation Coefficient

Transport International  ENN Energy

Good diversification

The 3 months correlation between Transport and ENN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and Transport International 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 Transport International Holdings are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Transport International i.e., Transport International and ENN Energy go up and down completely randomly.

Pair Corralation between Transport International and ENN Energy

Assuming the 90 days horizon Transport International Holdings is expected to under-perform the ENN Energy. But the stock apears to be less risky and, when comparing its historical volatility, Transport International Holdings is 1.76 times less risky than ENN Energy. The stock trades about -0.04 of its potential returns per unit of risk. The ENN Energy Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  667.00  in ENN Energy Holdings on September 26, 2024 and sell it today you would earn a total of  8.00  from holding ENN Energy Holdings or generate 1.2% return on investment over 90 days.

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

Transport International Holdin  vs.  ENN Energy Holdings

Transport International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transport International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ENN Energy Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transport International and ENN Energy

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

The idea behind Transport International Holdings and ENN Energy Holdings 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.