Correlation Between Esso SAF and Mtropole Tlvision

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

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

Diversification Opportunities for Esso SAF and Mtropole Tlvision

0.41

Correlation Coefficient

Esso SAF  Mtropole Tlvision

Very weak diversification

The 3 months correlation between Esso and Mtropole is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Mtropole Tlvision SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mtropole Tlvision 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 Mtropole Tlvision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mtropole Tlvision has no effect on the direction of Esso SAF i.e., Esso SAF and Mtropole Tlvision go up and down completely randomly.

Pair Corralation between Esso SAF and Mtropole Tlvision

Assuming the 90 days horizon Esso SAF is expected to generate 3.12 times more return on investment than Mtropole Tlvision. However, Esso SAF is 3.12 times more volatile than Mtropole Tlvision SA. It trades about 0.21 of its potential returns per unit of risk. Mtropole Tlvision SA is currently generating about 0.4 per unit of risk. If you would invest  10,460  in Esso SAF on December 27, 2024 and sell it today you would earn a total of  4,580  from holding Esso SAF or generate 43.79% return on investment over 90 days.

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

Esso SAF  vs.  Mtropole Tlvision SA

Esso SAF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Esso SAF are ranked lower than 16 (%) 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.

Mtropole Tlvision

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Mtropole Tlvision SA are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mtropole Tlvision sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esso SAF and Mtropole Tlvision

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

The idea behind Esso SAF and Mtropole Tlvision 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.