Correlation Between Laboratorios Farmaceuticos and Enags SA

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

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

Diversification Opportunities for Laboratorios Farmaceuticos and Enags SA

0.66

Correlation Coefficient

Laboratorios Farmaceuticos  Enags SA

Poor diversification

The 3 months correlation between Laboratorios and Enags is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Laboratorios Farmaceuticos ROV and Enags SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enags SA and Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos ROVI 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 Laboratorios Farmaceuticos i.e., Laboratorios Farmaceuticos and Enags SA go up and down completely randomly.

Pair Corralation between Laboratorios Farmaceuticos and Enags SA

Assuming the 90 days trading horizon Laboratorios Farmaceuticos ROVI is expected to generate 1.34 times more return on investment than Enags SA. However, Laboratorios Farmaceuticos is 1.34 times more volatile than Enags SA. It trades about 0.11 of its potential returns per unit of risk. Enags SA is currently generating about 0.08 per unit of risk. If you would invest  4,893  in Laboratorios Farmaceuticos ROVI on April 22, 2025 and sell it today you would earn a total of  387.00  from holding Laboratorios Farmaceuticos ROVI or generate 7.91% return on investment over 90 days.

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

Laboratorios Farmaceuticos ROV  vs.  Enags SA

Laboratorios Farmaceuticos

Risk-Adjusted Performance

OK

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

Enags SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enags SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Enags SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Laboratorios Farmaceuticos and Enags SA

The main advantage of trading using opposite Laboratorios Farmaceuticos and Enags SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos ROVI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.