Correlation Between NCAB and Enea AB

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

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

Diversification Opportunities for NCAB and Enea AB

-0.11

Correlation Coefficient

NCAB  Enea AB

Good diversification

The 3 months correlation between NCAB and Enea is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NCAB Group and Enea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enea AB and NCAB 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 NCAB Group are associated (or correlated) with Enea AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enea AB has no effect on the direction of NCAB i.e., NCAB and Enea AB go up and down completely randomly.

Pair Corralation between NCAB and Enea AB

Assuming the 90 days trading horizon NCAB Group is expected to under-perform the Enea AB. In addition to that, NCAB is 1.21 times more volatile than Enea AB. It trades about -0.06 of its total potential returns per unit of risk. Enea AB is currently generating about 0.11 per unit of volatility. If you would invest  7,530  in Enea AB on September 24, 2024 and sell it today you would earn a total of  2,380  from holding Enea AB or generate 31.61% return on investment over 90 days.

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

NCAB Group  vs.  Enea AB

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enea AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enea AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Enea AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NCAB and Enea AB

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

The idea behind NCAB Group and Enea AB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..