Correlation Between Enel SpA and Concord New

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

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

Diversification Opportunities for Enel SpA and Concord New

-0.81

Correlation Coefficient

Enel SpA  Concord New

Pay attention - limited upside

The 3 months correlation between Enel and Concord is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Enel SpA and Concord New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord New Energy and Enel SpA 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 Enel SpA are associated (or correlated) with Concord New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord New Energy has no effect on the direction of Enel SpA i.e., Enel SpA and Concord New go up and down completely randomly.

Pair Corralation between Enel SpA and Concord New

Assuming the 90 days horizon Enel SpA is expected to generate 1.03 times less return on investment than Concord New. But when comparing it to its historical volatility, Enel SpA is 3.56 times less risky than Concord New. It trades about 0.28 of its potential returns per unit of risk. Concord New Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5.45  in Concord New Energy on June 29, 2024 and sell it today you would earn a total of  0.25  from holding Concord New Energy or generate 4.59% return on investment over 90 days.

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

Enel SpA  vs.  Concord New Energy

Enel SpA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enel SpA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Enel SpA may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Concord New Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Enel SpA and Concord New

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

The idea behind Enel SpA and Concord New Energy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.