Correlation Between Fomento De and Enags SA

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

By analyzing existing cross correlation between Fomento de Construcciones and Enags SA, you can compare the effects of market volatilities on Fomento De and Enags SA 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 Fomento De with a short position of Enags SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento De and Enags SA.

Diversification Opportunities for Fomento De and Enags SA

0.82

Correlation Coefficient

Fomento De  Enags SA

Very poor diversification

The 3 months correlation between Fomento and Enags is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fomento de Construcciones and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA and Fomento De 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 Fomento de Construcciones are associated (or correlated) with Enags SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enags SA has no effect on the direction of Fomento De i.e., Fomento De and Enags SA go up and down completely randomly.

Pair Corralation between Fomento De and Enags SA

Assuming the 90 days trading horizon Fomento de Construcciones is expected to under-perform the Enags SA. In addition to that, Fomento De is 2.35 times more volatile than Enags SA. It trades about -0.1 of its total potential returns per unit of risk. Enags SA is currently generating about -0.18 per unit of volatility. If you would invest  1,389  in Enags SA on April 23, 2025 and sell it today you would lose (41.00) from holding Enags SA or give up 2.95% of portfolio value over 90 days.

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

Fomento de Construcciones  vs.  Enags SA

Fomento de Construcciones

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento de Construcciones are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Fomento De may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Enags SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enags SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Enags SA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fomento De and Enags SA

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

The idea behind Fomento de Construcciones and Enags SA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.