Correlation Between Open Text and Enghouse Systems

Can any of the company-specific risk be diversified away by investing in both Open Text and Enghouse Systems 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 Open Text and Enghouse Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Open Text Corp and Enghouse Systems, you can compare the effects of market volatilities on Open Text and Enghouse Systems 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 Open Text with a short position of Enghouse Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Text and Enghouse Systems.

Diversification Opportunities for Open Text and Enghouse Systems

-0.18

Correlation Coefficient

Open Text  Enghouse Systems

Good diversification

The 3 months correlation between Open and Enghouse is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Open Text Corp and Enghouse Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enghouse Systems and Open Text 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 Open Text Corp are associated (or correlated) with Enghouse Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enghouse Systems has no effect on the direction of Open Text i.e., Open Text and Enghouse Systems go up and down completely randomly.

Pair Corralation between Open Text and Enghouse Systems

Assuming the 90 days trading horizon Open Text Corp is expected to generate 0.96 times more return on investment than Enghouse Systems. However, Open Text Corp is 1.04 times less risky than Enghouse Systems. It trades about 0.12 of its potential returns per unit of risk. Enghouse Systems is currently generating about -0.02 per unit of risk. If you would invest  3,487  in Open Text Corp on April 22, 2025 and sell it today you would earn a total of  420.00  from holding Open Text Corp or generate 12.04% return on investment over 90 days.

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

Open Text Corp  vs.  Enghouse Systems

Open Text Corp

Risk-Adjusted Performance

OK

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

Enghouse Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enghouse Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Open Text and Enghouse Systems

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

The idea behind Open Text Corp and Enghouse Systems 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.