Correlation Between Vicor and Ensurge Micropower

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

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

Diversification Opportunities for Vicor and Ensurge Micropower

0.6

Correlation Coefficient

Vicor  Ensurge Micropower

Poor diversification

The 3 months correlation between Vicor and Ensurge is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vicor and Ensurge Micropower ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensurge Micropower ASA and Vicor 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 Vicor are associated (or correlated) with Ensurge Micropower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensurge Micropower ASA has no effect on the direction of Vicor i.e., Vicor and Ensurge Micropower go up and down completely randomly.

Pair Corralation between Vicor and Ensurge Micropower

Given the investment horizon of 90 days Vicor is expected to generate 2.66 times less return on investment than Ensurge Micropower. But when comparing it to its historical volatility, Vicor is 1.14 times less risky than Ensurge Micropower. It trades about 0.04 of its potential returns per unit of risk. Ensurge Micropower ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9.40  in Ensurge Micropower ASA on December 28, 2024 and sell it today you would earn a total of  2.60  from holding Ensurge Micropower ASA or generate 27.66% return on investment over 90 days.

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

Vicor  vs.  Ensurge Micropower ASA

Vicor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vicor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Vicor reported solid returns over the last few months and may actually be approaching a breakup point.

Ensurge Micropower ASA

Risk-Adjusted Performance

Modest

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

Pair Trading with Vicor and Ensurge Micropower

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

The idea behind Vicor and Ensurge Micropower ASA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.