Correlation Between Nexam Chemical and Enea AB

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

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

Diversification Opportunities for Nexam Chemical and Enea AB

0.9

Correlation Coefficient

Nexam Chemical  Enea AB

Almost no diversification

The 3 months correlation between Nexam and Enea is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Enea AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enea AB and Nexam Chemical 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 Nexam Chemical Holding 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 Nexam Chemical i.e., Nexam Chemical and Enea AB go up and down completely randomly.

Pair Corralation between Nexam Chemical and Enea AB

Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the Enea AB. In addition to that, Nexam Chemical is 1.77 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 -0.1 per unit of volatility. If you would invest  9,750  in Enea AB on December 22, 2024 and sell it today you would lose (1,200) from holding Enea AB or give up 12.31% of portfolio value over 90 days.

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

Nexam Chemical Holding  vs.  Enea AB

Nexam Chemical Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexam Chemical Holding 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Enea AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enea AB 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nexam Chemical and Enea AB

The main advantage of trading using opposite Nexam Chemical and Enea AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical 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 Nexam Chemical Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.