Correlation Between ESGL Holdings and CGG SA

Can any of the company-specific risk be diversified away by investing in both ESGL Holdings and CGG SA 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 ESGL Holdings and CGG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ESGL Holdings Limited and CGG SA ADR, you can compare the effects of market volatilities on ESGL Holdings and CGG SA 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 ESGL Holdings with a short position of CGG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and CGG SA.

Diversification Opportunities for ESGL Holdings and CGG SA

-0.37

Correlation Coefficient

ESGL Holdings  CGG SA

Very good diversification

The 3 months correlation between ESGL and CGG is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and CGG SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGG SA ADR and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with CGG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGG SA ADR has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and CGG SA go up and down completely randomly.

Pair Corralation between ESGL Holdings and CGG SA

If you would invest  1.34  in ESGL Holdings Limited on September 30, 2024 and sell it today you would earn a total of  0.06  from holding ESGL Holdings Limited or generate 4.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.23%
Values	Daily Returns

ESGL Holdings Limited  vs.  CGG SA ADR

ESGL Holdings Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, ESGL Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

CGG SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGG SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CGG SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ESGL Holdings and CGG SA

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

The idea behind ESGL Holdings Limited and CGG SA ADR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .