Correlation Between Esso SAF and Entreparticuli

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

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

Diversification Opportunities for Esso SAF and Entreparticuli

0.62

Correlation Coefficient

Esso SAF  Entreparticuli

Poor diversification

The 3 months correlation between Esso and Entreparticuli is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Entreparticuli in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entreparticuli 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 Entreparticuli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entreparticuli has no effect on the direction of Esso SAF i.e., Esso SAF and Entreparticuli go up and down completely randomly.

Pair Corralation between Esso SAF and Entreparticuli

Assuming the 90 days horizon Esso SAF is expected to under-perform the Entreparticuli. But the stock apears to be less risky and, when comparing its historical volatility, Esso SAF is 1.31 times less risky than Entreparticuli. The stock trades about -0.11 of its potential returns per unit of risk. The Entreparticuli is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Entreparticuli on September 6, 2024 and sell it today you would lose (7.00) from holding Entreparticuli or give up 13.73% of portfolio value over 90 days.

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

Esso SAF  vs.  Entreparticuli

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.

Entreparticuli

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entreparticuli has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Esso SAF and Entreparticuli

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

The idea behind Esso SAF and Entreparticuli 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.