Correlation Between Exela Technologies and Enfusion

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

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

Diversification Opportunities for Exela Technologies and Enfusion

-0.54

Correlation Coefficient

Exela Technologies  Enfusion

Excellent diversification

The 3 months correlation between Exela and Enfusion is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Exela Technologies Preferred and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Exela Technologies 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 Exela Technologies Preferred are associated (or correlated) with Enfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enfusion has no effect on the direction of Exela Technologies i.e., Exela Technologies and Enfusion go up and down completely randomly.

Pair Corralation between Exela Technologies and Enfusion

Assuming the 90 days horizon Exela Technologies Preferred is expected to under-perform the Enfusion. In addition to that, Exela Technologies is 2.79 times more volatile than Enfusion. It trades about -0.05 of its total potential returns per unit of risk. Enfusion is currently generating about 0.01 per unit of volatility. If you would invest  1,112  in Enfusion on October 24, 2024 and sell it today you would earn a total of  2.00  from holding Enfusion or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.49%
Values	Daily Returns

Exela Technologies Preferred  vs.  Enfusion

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Enfusion

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exela Technologies and Enfusion

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

The idea behind Exela Technologies Preferred and Enfusion 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.