Correlation Between Oeneo SA and Enogia SAS

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

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

Diversification Opportunities for Oeneo SA and Enogia SAS

-0.4

Correlation Coefficient

Oeneo SA  Enogia SAS

Very good diversification

The 3 months correlation between Oeneo and Enogia is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Oeneo SA and Enogia SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enogia SAS and Oeneo SA 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 Oeneo SA are associated (or correlated) with Enogia SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enogia SAS has no effect on the direction of Oeneo SA i.e., Oeneo SA and Enogia SAS go up and down completely randomly.

Pair Corralation between Oeneo SA and Enogia SAS

Assuming the 90 days trading horizon Oeneo SA is expected to under-perform the Enogia SAS. But the stock apears to be less risky and, when comparing its historical volatility, Oeneo SA is 2.11 times less risky than Enogia SAS. The stock trades about -0.09 of its potential returns per unit of risk. The Enogia SAS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Enogia SAS on October 23, 2024 and sell it today you would earn a total of  22.00  from holding Enogia SAS or generate 12.09% return on investment over 90 days.

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

Oeneo SA  vs.  Enogia SAS

Oeneo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oeneo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Enogia SAS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enogia SAS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Enogia SAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oeneo SA and Enogia SAS

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

The idea behind Oeneo SA and Enogia SAS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.