Correlation Between Enersys and Surf Air

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

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

Diversification Opportunities for Enersys and Surf Air

-0.41

Correlation Coefficient

Enersys  Surf Air

Very good diversification

The 3 months correlation between Enersys and Surf is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and Surf Air Mobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surf Air Mobility and Enersys 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 Enersys are associated (or correlated) with Surf Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surf Air Mobility has no effect on the direction of Enersys i.e., Enersys and Surf Air go up and down completely randomly.

Pair Corralation between Enersys and Surf Air

Considering the 90-day investment horizon Enersys is expected to generate 0.13 times more return on investment than Surf Air. However, Enersys is 7.58 times less risky than Surf Air. It trades about 0.1 of its potential returns per unit of risk. Surf Air Mobility is currently generating about -0.16 per unit of risk. If you would invest  9,064  in Enersys on February 20, 2024 and sell it today you would earn a total of  630.00  from holding Enersys or generate 6.95% return on investment over 90 days.

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

Enersys  vs.  Surf Air Mobility

Enersys

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enersys are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enersys may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Surf Air Mobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surf Air Mobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Enersys and Surf Air

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

The idea behind Enersys and Surf Air Mobility 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.