Correlation Between IND+COMMBK CHINA and ENSTAR GROUP

Can any of the company-specific risk be diversified away by investing in both IND+COMMBK CHINA and ENSTAR GROUP 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 IND+COMMBK CHINA and ENSTAR GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and ENSTAR GROUP LTD, you can compare the effects of market volatilities on IND+COMMBK CHINA and ENSTAR GROUP 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 IND+COMMBK CHINA with a short position of ENSTAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IND+COMMBK CHINA and ENSTAR GROUP.

Diversification Opportunities for IND+COMMBK CHINA and ENSTAR GROUP

-0.63

Correlation Coefficient

IND+COMMBK CHINA  ENSTAR GROUP

Excellent diversification

The 3 months correlation between IND+COMMBK and ENSTAR is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and ENSTAR GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENSTAR GROUP LTD and IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20 are associated (or correlated) with ENSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENSTAR GROUP LTD has no effect on the direction of IND+COMMBK CHINA i.e., IND+COMMBK CHINA and ENSTAR GROUP go up and down completely randomly.

Pair Corralation between IND+COMMBK CHINA and ENSTAR GROUP

Assuming the 90 days trading horizon INDCOMMBK CHINA ADR20 is expected to generate 4.53 times more return on investment than ENSTAR GROUP. However, IND+COMMBK CHINA is 4.53 times more volatile than ENSTAR GROUP LTD. It trades about -0.01 of its potential returns per unit of risk. ENSTAR GROUP LTD is currently generating about -0.61 per unit of risk. If you would invest  1,321  in INDCOMMBK CHINA ADR20 on April 22, 2025 and sell it today you would lose (11.00) from holding INDCOMMBK CHINA ADR20 or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	42.86%
Values	Daily Returns

INDCOMMBK CHINA ADR20  vs.  ENSTAR GROUP LTD

INDCOMMBK CHINA ADR20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDCOMMBK CHINA ADR20 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, IND+COMMBK CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

ENSTAR GROUP LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days ENSTAR GROUP LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ENSTAR GROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IND+COMMBK CHINA and ENSTAR GROUP

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

The idea behind INDCOMMBK CHINA ADR20 and ENSTAR GROUP LTD 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.