Correlation Between GLOBUS MEDICAL and ENN Energy

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Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL 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 GLOBUS MEDICAL and ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLOBUS MEDICAL A and ENN Energy Holdings, you can compare the effects of market volatilities on GLOBUS MEDICAL 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 GLOBUS MEDICAL with a short position of ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL and ENN Energy.

Diversification Opportunities for GLOBUS MEDICAL and ENN Energy

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between GLOBUS and ENN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A 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 GLOBUS MEDICAL 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 GLOBUS MEDICAL A 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 GLOBUS MEDICAL i.e., GLOBUS MEDICAL and ENN Energy go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL and ENN Energy

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to under-perform the ENN Energy. But the stock apears to be less risky and, when comparing its historical volatility, GLOBUS MEDICAL A is 1.95 times less risky than ENN Energy. The stock trades about -0.1 of its potential returns per unit of risk. The 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

GLOBUS MEDICAL A  vs.  ENN Energy Holdings

 Performance 
       Timeline  
GLOBUS MEDICAL A 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.
ENN Energy Holdings 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
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.

GLOBUS MEDICAL and ENN Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GLOBUS MEDICAL and ENN Energy

The main advantage of trading using opposite GLOBUS MEDICAL and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL 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 GLOBUS MEDICAL A 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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