Correlation Between Resmed and Enegex NL

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

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

Diversification Opportunities for Resmed and Enegex NL

-0.73

Correlation Coefficient

Resmed  Enegex NL

Pay attention - limited upside

The 3 months correlation between Resmed and Enegex is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and Enegex NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enegex NL and Resmed 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 Resmed Inc DRC are associated (or correlated) with Enegex NL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enegex NL has no effect on the direction of Resmed i.e., Resmed and Enegex NL go up and down completely randomly.

Pair Corralation between Resmed and Enegex NL

Assuming the 90 days trading horizon Resmed Inc DRC is expected to generate 0.35 times more return on investment than Enegex NL. However, Resmed Inc DRC is 2.87 times less risky than Enegex NL. It trades about 0.1 of its potential returns per unit of risk. Enegex NL is currently generating about 0.01 per unit of risk. If you would invest  2,199  in Resmed Inc DRC on October 6, 2024 and sell it today you would earn a total of  1,477  from holding Resmed Inc DRC or generate 67.17% return on investment over 90 days.

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

Resmed Inc DRC  vs.  Enegex NL

Resmed Inc DRC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resmed Inc DRC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Resmed may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enegex NL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Resmed and Enegex NL

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

The idea behind Resmed Inc DRC and Enegex NL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.