Correlation Between Esso SAF and Etablissements Maurel

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

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

Diversification Opportunities for Esso SAF and Etablissements Maurel

0.79

Correlation Coefficient

Esso SAF  Etablissements Maurel

Poor diversification

The 3 months correlation between Esso and Etablissements is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Etablissements Maurel et in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etablissements Maurel 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 Etablissements Maurel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etablissements Maurel has no effect on the direction of Esso SAF i.e., Esso SAF and Etablissements Maurel go up and down completely randomly.

Pair Corralation between Esso SAF and Etablissements Maurel

Assuming the 90 days horizon Esso SAF is expected to generate 0.97 times more return on investment than Etablissements Maurel. However, Esso SAF is 1.03 times less risky than Etablissements Maurel. It trades about 0.12 of its potential returns per unit of risk. Etablissements Maurel et is currently generating about 0.11 per unit of risk. If you would invest  10,400  in Esso SAF on December 5, 2024 and sell it today you would earn a total of  1,460  from holding Esso SAF or generate 14.04% return on investment over 90 days.

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

Esso SAF  vs.  Etablissements Maurel et

Esso SAF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esso SAF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Esso SAF sustained solid returns over the last few months and may actually be approaching a breakup point.

Etablissements Maurel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Etablissements Maurel et are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Etablissements Maurel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esso SAF and Etablissements Maurel

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

The idea behind Esso SAF and Etablissements Maurel et 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.