Correlation Between Socit BIC and Esso SAF

Can any of the company-specific risk be diversified away by investing in both Socit BIC and Esso SAF 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 Socit BIC and Esso SAF into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Socit BIC and Esso SAF

-0.76

Correlation Coefficient

Socit BIC  Esso SAF

Pay attention - limited upside

The 3 months correlation between Socit and Esso is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Socit BIC SA and Esso SAF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso SAF and Socit BIC 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 Socit BIC SA are associated (or correlated) with Esso SAF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esso SAF has no effect on the direction of Socit BIC i.e., Socit BIC and Esso SAF go up and down completely randomly.

Pair Corralation between Socit BIC and Esso SAF

Assuming the 90 days horizon Socit BIC SA is expected to generate 0.83 times more return on investment than Esso SAF. However, Socit BIC SA is 1.2 times less risky than Esso SAF. It trades about 0.05 of its potential returns per unit of risk. Esso SAF is currently generating about -0.14 per unit of risk. If you would invest  6,020  in Socit BIC SA on September 3, 2024 and sell it today you would earn a total of  290.00  from holding Socit BIC SA or generate 4.82% return on investment over 90 days.

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

Socit BIC SA  vs.  Esso SAF

Socit BIC SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Socit BIC SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Socit BIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Esso SAF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esso SAF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Socit BIC and Esso SAF

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

The idea behind Socit BIC SA and Esso SAF 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.