Correlation Between Pason Systems and Ensign Energy

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

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

Diversification Opportunities for Pason Systems and Ensign Energy

0.59

Correlation Coefficient

Pason Systems  Ensign Energy

Very weak diversification

The 3 months correlation between Pason and Ensign is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pason Systems and Ensign Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Energy Services and Pason Systems 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 Pason Systems are associated (or correlated) with Ensign Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Energy Services has no effect on the direction of Pason Systems i.e., Pason Systems and Ensign Energy go up and down completely randomly.

Pair Corralation between Pason Systems and Ensign Energy

Assuming the 90 days trading horizon Pason Systems is expected to generate 1.57 times less return on investment than Ensign Energy. But when comparing it to its historical volatility, Pason Systems is 1.77 times less risky than Ensign Energy. It trades about 0.01 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  356.00  in Ensign Energy Services on October 27, 2024 and sell it today you would lose (20.00) from holding Ensign Energy Services or give up 5.62% of portfolio value over 90 days.

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

Pason Systems  vs.  Ensign Energy Services

Pason Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pason Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pason Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ensign Energy Services

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ensign Energy Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Ensign Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pason Systems and Ensign Energy

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

The idea behind Pason Systems and Ensign Energy Services 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 CEOs Directory module to screen CEOs from public companies around the world.