Correlation Between Momentum Group and Enersize

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

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

Diversification Opportunities for Momentum Group and Enersize

-0.27

Correlation Coefficient

Momentum Group  Enersize

Very good diversification

The 3 months correlation between Momentum and Enersize is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Momentum Group AB and Enersize Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersize Oy and Momentum 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 Momentum Group 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 Momentum Group i.e., Momentum Group and Enersize go up and down completely randomly.

Pair Corralation between Momentum Group and Enersize

Assuming the 90 days trading horizon Momentum Group AB is expected to generate 0.56 times more return on investment than Enersize. However, Momentum Group AB is 1.8 times less risky than Enersize. It trades about 0.06 of its potential returns per unit of risk. Enersize Oy is currently generating about -0.24 per unit of risk. If you would invest  16,980  in Momentum Group AB on September 25, 2024 and sell it today you would earn a total of  460.00  from holding Momentum Group AB or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Momentum Group AB  vs.  Enersize Oy

Momentum Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Momentum Group and Enersize positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentum Group 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 Momentum Group 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.