Correlation Between Parx Plastics and Esso SAF
Can any of the company-specific risk be diversified away by investing in both Parx Plastics 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 Parx Plastics and Esso SAF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parx Plastics NV and Esso SAF, you can compare the effects of market volatilities on Parx Plastics 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 Parx Plastics with a short position of Esso SAF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parx Plastics and Esso SAF.
Diversification Opportunities for Parx Plastics and Esso SAF
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Parx and Esso is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Parx Plastics NV and Esso SAF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso SAF and Parx Plastics 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 Parx Plastics NV 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 Parx Plastics i.e., Parx Plastics and Esso SAF go up and down completely randomly.
Pair Corralation between Parx Plastics and Esso SAF
Assuming the 90 days trading horizon Parx Plastics NV is expected to under-perform the Esso SAF. In addition to that, Parx Plastics is 1.98 times more volatile than Esso SAF. It trades about -0.22 of its total potential returns per unit of risk. Esso SAF is currently generating about 0.2 per unit of volatility. If you would invest 10,560 in Esso SAF on December 28, 2024 and sell it today you would earn a total of 4,440 from holding Esso SAF or generate 42.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Parx Plastics NV vs. Esso SAF
Performance |
Timeline |
Parx Plastics NV |
Esso SAF |
Parx Plastics and Esso SAF Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Parx Plastics and Esso SAF
The main advantage of trading using opposite Parx Plastics and Esso SAF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parx Plastics 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.Parx Plastics vs. Amplitude Surgical SAS | Parx Plastics vs. Sensorion SA | Parx Plastics vs. Fiducial Office Solutions |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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