Correlation Between Nacon Sa and Energisme

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

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

Diversification Opportunities for Nacon Sa and Energisme

-0.1

Correlation Coefficient

Nacon Sa  Energisme

Good diversification

The 3 months correlation between Nacon and Energisme is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nacon Sa and Energisme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energisme and Nacon Sa 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 Nacon Sa are associated (or correlated) with Energisme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energisme has no effect on the direction of Nacon Sa i.e., Nacon Sa and Energisme go up and down completely randomly.

Pair Corralation between Nacon Sa and Energisme

Assuming the 90 days trading horizon Nacon Sa is expected to generate 0.38 times more return on investment than Energisme. However, Nacon Sa is 2.63 times less risky than Energisme. It trades about -0.07 of its potential returns per unit of risk. Energisme is currently generating about -0.06 per unit of risk. If you would invest  233.00  in Nacon Sa on September 29, 2024 and sell it today you would lose (173.00) from holding Nacon Sa or give up 74.25% of portfolio value over 90 days.

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

Nacon Sa  vs.  Energisme

Nacon Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nacon Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Energisme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energisme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Energisme is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nacon Sa and Energisme

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

The idea behind Nacon Sa and Energisme 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 Stocks Directory module to find actively traded stocks across global markets.