Correlation Between Marine Products and Enlight Renewable

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

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

Diversification Opportunities for Marine Products and Enlight Renewable

0.08

Correlation Coefficient

Marine Products  Enlight Renewable

Significant diversification

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

Pair Corralation between Marine Products and Enlight Renewable

Considering the 90-day investment horizon Marine Products is expected to under-perform the Enlight Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Marine Products is 1.19 times less risky than Enlight Renewable. The stock trades about -0.02 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,621  in Enlight Renewable Energy on September 24, 2024 and sell it today you would lose (40.00) from holding Enlight Renewable Energy or give up 2.47% of portfolio value over 90 days.

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

Marine Products  vs.  Enlight Renewable Energy

Marine Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Enlight Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marine Products and Enlight Renewable

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

The idea behind Marine Products and Enlight Renewable Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.