Correlation Between Transtema Group and Enad Global

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

By analyzing existing cross correlation between Transtema Group AB and Enad Global 7, you can compare the effects of market volatilities on Transtema Group and Enad Global 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 Transtema Group with a short position of Enad Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transtema Group and Enad Global.

Diversification Opportunities for Transtema Group and Enad Global

-0.31

Correlation Coefficient

Transtema Group  Enad Global

Very good diversification

The 3 months correlation between Transtema and Enad is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Transtema Group AB and Enad Global 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enad Global 7 and Transtema Group 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 Transtema Group AB are associated (or correlated) with Enad Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enad Global 7 has no effect on the direction of Transtema Group i.e., Transtema Group and Enad Global go up and down completely randomly.

Pair Corralation between Transtema Group and Enad Global

Assuming the 90 days trading horizon Transtema Group AB is expected to under-perform the Enad Global. But the stock apears to be less risky and, when comparing its historical volatility, Transtema Group AB is 1.06 times less risky than Enad Global. The stock trades about -0.05 of its potential returns per unit of risk. The Enad Global 7 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,943  in Enad Global 7 on October 11, 2024 and sell it today you would lose (1,382) from holding Enad Global 7 or give up 46.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Transtema Group AB  vs.  Enad Global 7

Transtema Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transtema Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Transtema Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Enad Global 7

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enad Global 7 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enad Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transtema Group and Enad Global

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

The idea behind Transtema Group AB and Enad Global 7 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.