Correlation Between Mekonomen and Enersize

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

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

Diversification Opportunities for Mekonomen and Enersize

-0.02

Correlation Coefficient

Mekonomen  Enersize

Good diversification

The 3 months correlation between Mekonomen and Enersize is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Enersize Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersize Oy and Mekonomen 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 Mekonomen AB are associated (or correlated) with Enersize. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersize Oy has no effect on the direction of Mekonomen i.e., Mekonomen and Enersize go up and down completely randomly.

Pair Corralation between Mekonomen and Enersize

Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.35 times more return on investment than Enersize. However, Mekonomen AB is 2.89 times less risky than Enersize. It trades about -0.02 of its potential returns per unit of risk. Enersize Oy is currently generating about -0.24 per unit of risk. If you would invest  13,200  in Mekonomen AB on September 25, 2024 and sell it today you would lose (140.00) from holding Mekonomen AB or give up 1.06% of portfolio value over 90 days.

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

Mekonomen AB  vs.  Enersize Oy

Mekonomen AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mekonomen AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mekonomen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Enersize Oy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersize Oy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mekonomen and Enersize

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

The idea behind Mekonomen AB and Enersize Oy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.