Correlation Between Gladstone Investment and ENN Energy

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

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

Diversification Opportunities for Gladstone Investment and ENN Energy

0.41

Correlation Coefficient

Gladstone Investment  ENN Energy

Very weak diversification

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

Pair Corralation between Gladstone Investment and ENN Energy

Assuming the 90 days horizon Gladstone Investment is expected to generate 3.29 times less return on investment than ENN Energy. But when comparing it to its historical volatility, Gladstone Investment is 1.91 times less risky than ENN Energy. It trades about 0.08 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  630.00  in ENN Energy Holdings on September 26, 2024 and sell it today you would earn a total of  45.00  from holding ENN Energy Holdings or generate 7.14% return on investment over 90 days.

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

Gladstone Investment  vs.  ENN Energy Holdings

Gladstone Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ENN Energy Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gladstone Investment and ENN Energy

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

The idea behind Gladstone Investment and ENN Energy Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.