Correlation Between Oeneo SA and Esso SAF

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Can any of the company-specific risk be diversified away by investing in both Oeneo SA 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 Oeneo SA and Esso SAF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oeneo SA and Esso SAF, you can compare the effects of market volatilities on Oeneo SA 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 Oeneo SA with a short position of Esso SAF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oeneo SA and Esso SAF.

Diversification Opportunities for Oeneo SA and Esso SAF

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Oeneo and Esso is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oeneo SA and Esso SAF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso SAF and Oeneo SA 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 Oeneo 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 Oeneo SA i.e., Oeneo SA and Esso SAF go up and down completely randomly.

Pair Corralation between Oeneo SA and Esso SAF

Assuming the 90 days trading horizon Oeneo SA is expected to generate 0.35 times more return on investment than Esso SAF. However, Oeneo SA is 2.89 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 -0.11 per unit of risk. If you would invest  981.00  in Oeneo SA on September 6, 2024 and sell it today you would lose (27.00) from holding Oeneo SA or give up 2.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.46%
ValuesDaily Returns

Oeneo SA  vs.  Esso SAF

 Performance 
       Timeline  
Oeneo SA 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Esso SAF 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 and Esso SAF Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oeneo SA and Esso SAF

The main advantage of trading using opposite Oeneo SA and Esso SAF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oeneo SA 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 Oeneo 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.
Check out your portfolio center.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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