Correlation Between Etablissements Maurel and Esso SAF

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

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

Diversification Opportunities for Etablissements Maurel and Esso SAF

0.37

Correlation Coefficient

Etablissements Maurel  Esso SAF

Weak diversification

The 3 months correlation between Etablissements and Esso is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Etablissements Maurel et and Esso SAF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso SAF and Etablissements Maurel 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 Etablissements Maurel et 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 Etablissements Maurel i.e., Etablissements Maurel and Esso SAF go up and down completely randomly.

Pair Corralation between Etablissements Maurel and Esso SAF

Assuming the 90 days trading horizon Etablissements Maurel et is expected to generate 0.77 times more return on investment than Esso SAF. However, Etablissements Maurel et is 1.3 times less risky than Esso SAF. It trades about -0.02 of its potential returns per unit of risk. Esso SAF is currently generating about -0.16 per unit of risk. If you would invest  518.00  in Etablissements Maurel et on September 2, 2024 and sell it today you would lose (17.00) from holding Etablissements Maurel et or give up 3.28% of portfolio value over 90 days.

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

Etablissements Maurel et  vs.  Esso SAF

Etablissements Maurel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etablissements Maurel et has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Etablissements Maurel 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 Etablissements Maurel and Esso SAF

The main advantage of trading using opposite Etablissements Maurel and Esso SAF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etablissements Maurel 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 Etablissements Maurel et 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.