Correlation Between Lipum AB and Enad Global

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

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

Diversification Opportunities for Lipum AB and Enad Global

-0.43

Correlation Coefficient

Lipum AB  Enad Global

Very good diversification

The 3 months correlation between Lipum and Enad is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lipum 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 Lipum AB 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 Lipum 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 Lipum AB i.e., Lipum AB and Enad Global go up and down completely randomly.

Pair Corralation between Lipum AB and Enad Global

Assuming the 90 days trading horizon Lipum AB is expected to generate 1.66 times more return on investment than Enad Global. However, Lipum AB is 1.66 times more volatile than Enad Global 7. It trades about 0.04 of its potential returns per unit of risk. Enad Global 7 is currently generating about 0.0 per unit of risk. If you would invest  910.00  in Lipum AB on October 1, 2024 and sell it today you would earn a total of  290.00  from holding Lipum AB or generate 31.87% return on investment over 90 days.

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

Lipum AB  vs.  Enad Global 7

Lipum AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lipum AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 Lipum AB and Enad Global

The main advantage of trading using opposite Lipum AB and Enad Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB 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 Lipum 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.