Correlation Between APA and ENN Energy

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

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

Diversification Opportunities for APA and ENN Energy

0.0

Correlation Coefficient

APA  ENN Energy

Pay attention - limited upside

The 3 months correlation between APA and ENN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding APA Group and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings and APA 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 APA Group are associated (or correlated) with ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of APA i.e., APA and ENN Energy go up and down completely randomly.

Pair Corralation between APA and ENN Energy

If you would invest  394.00  in APA Group on October 26, 2024 and sell it today you would earn a total of  13.00  from holding APA Group or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

APA Group  vs.  ENN Energy Holdings

APA Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APA Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, APA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ENN Energy Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENN Energy Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ENN Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with APA and ENN Energy

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

The idea behind APA Group and ENN Energy Holdings 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.