Correlation Between Esso SAF and Enogia SAS

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

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

Diversification Opportunities for Esso SAF and Enogia SAS

0.59

Correlation Coefficient

Esso SAF  Enogia SAS

Very weak diversification

The 3 months correlation between Esso and Enogia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Enogia SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enogia SAS and Esso SAF 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 Esso SAF are associated (or correlated) with Enogia SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enogia SAS has no effect on the direction of Esso SAF i.e., Esso SAF and Enogia SAS go up and down completely randomly.

Pair Corralation between Esso SAF and Enogia SAS

Assuming the 90 days horizon Esso SAF is expected to generate 1.17 times more return on investment than Enogia SAS. However, Esso SAF is 1.17 times more volatile than Enogia SAS. It trades about 0.08 of its potential returns per unit of risk. Enogia SAS is currently generating about -0.04 per unit of risk. If you would invest  3,975  in Esso SAF on September 6, 2024 and sell it today you would earn a total of  6,425  from holding Esso SAF or generate 161.64% return on investment over 90 days.

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

Esso SAF  vs.  Enogia SAS

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.

Enogia SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enogia SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Esso SAF and Enogia SAS

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

The idea behind Esso SAF and Enogia SAS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.