Correlation Between ENN Energy and PICC Property

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

By analyzing existing cross correlation between ENN Energy Holdings and PICC Property and, you can compare the effects of market volatilities on ENN Energy and PICC Property 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 ENN Energy with a short position of PICC Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and PICC Property.

Diversification Opportunities for ENN Energy and PICC Property

0.54

Correlation Coefficient

ENN Energy  PICC Property

Very weak diversification

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

Pair Corralation between ENN Energy and PICC Property

Assuming the 90 days horizon ENN Energy Holdings is expected to generate 1.08 times more return on investment than PICC Property. However, ENN Energy is 1.08 times more volatile than PICC Property and. It trades about 0.14 of its potential returns per unit of risk. PICC Property and is currently generating about 0.12 per unit of risk. If you would invest  2,864  in ENN Energy Holdings on December 27, 2024 and sell it today you would earn a total of  746.00  from holding ENN Energy Holdings or generate 26.05% return on investment over 90 days.

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

ENN Energy Holdings  vs.  PICC Property and

ENN Energy Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ENN Energy showed solid returns over the last few months and may actually be approaching a breakup point.

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, PICC Property showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENN Energy and PICC Property

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

The idea behind ENN Energy Holdings and PICC Property and 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.