Correlation Between Esso SAF and Oeneo SA

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

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

Diversification Opportunities for Esso SAF and Oeneo SA

0.61

Correlation Coefficient

Esso SAF  Oeneo SA

Poor diversification

The 3 months correlation between Esso and Oeneo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Oeneo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oeneo SA 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 Oeneo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oeneo SA has no effect on the direction of Esso SAF i.e., Esso SAF and Oeneo SA go up and down completely randomly.

Pair Corralation between Esso SAF and Oeneo SA

Assuming the 90 days horizon Esso SAF is expected to under-perform the Oeneo SA. In addition to that, Esso SAF is 2.53 times more volatile than Oeneo SA. It trades about -0.04 of its total potential returns per unit of risk. Oeneo SA is currently generating about -0.01 per unit of volatility. If you would invest  995.00  in Oeneo SA on September 9, 2024 and sell it today you would lose (45.00) from holding Oeneo SA or give up 4.52% 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.  Oeneo SA

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.

Oeneo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oeneo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Oeneo SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Esso SAF and Oeneo SA

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

The idea behind Esso SAF and Oeneo 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.