Correlation Between Esso SAF and Stradim Espace

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

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

Diversification Opportunities for Esso SAF and Stradim Espace

0.24

Correlation Coefficient

Esso SAF  Stradim Espace

Modest diversification

The 3 months correlation between Esso and Stradim is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Stradim Espace Finances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stradim Espace Finances 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 Stradim Espace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stradim Espace Finances has no effect on the direction of Esso SAF i.e., Esso SAF and Stradim Espace go up and down completely randomly.

Pair Corralation between Esso SAF and Stradim Espace

Assuming the 90 days horizon Esso SAF is expected to under-perform the Stradim Espace. But the stock apears to be less risky and, when comparing its historical volatility, Esso SAF is 1.95 times less risky than Stradim Espace. The stock trades about -0.09 of its potential returns per unit of risk. The Stradim Espace Finances is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Stradim Espace Finances on October 7, 2024 and sell it today you would earn a total of  25.00  from holding Stradim Espace Finances or generate 4.72% return on investment over 90 days.

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

Esso SAF  vs.  Stradim Espace Finances

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Stradim Espace Finances

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stradim Espace Finances are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Stradim Espace may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Esso SAF and Stradim Espace

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

The idea behind Esso SAF and Stradim Espace Finances 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.