Correlation Between Esso SAF and Largo SAS
Can any of the company-specific risk be diversified away by investing in both Esso SAF and Largo SAS 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 Largo SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esso SAF and Largo SAS, you can compare the effects of market volatilities on Esso SAF and Largo SAS 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 Largo SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esso SAF and Largo SAS.
Diversification Opportunities for Esso SAF and Largo SAS
Very good diversification
The 3 months correlation between Esso and Largo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Largo SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largo SAS 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 Largo SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largo SAS has no effect on the direction of Esso SAF i.e., Esso SAF and Largo SAS go up and down completely randomly.
Pair Corralation between Esso SAF and Largo SAS
Assuming the 90 days horizon Esso SAF is expected to generate 0.65 times more return on investment than Largo SAS. However, Esso SAF is 1.53 times less risky than Largo SAS. It trades about 0.07 of its potential returns per unit of risk. Largo SAS is currently generating about 0.0 per unit of risk. If you would invest 4,145 in Esso SAF on September 3, 2024 and sell it today you would earn a total of 5,845 from holding Esso SAF or generate 141.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esso SAF vs. Largo SAS
Performance |
| Timeline |
| Esso SAF |
| Largo SAS |
Esso SAF and Largo SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esso SAF and Largo SAS
The main advantage of trading using opposite Esso SAF and Largo SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esso SAF position performs unexpectedly, Largo SAS 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 Largo SAS will offset losses from the drop in Largo SAS's long position.| Esso SAF vs. Etablissements Maurel et | Esso SAF vs. Eramet SA | Esso SAF vs. Socit BIC SA | Esso SAF vs. TotalEnergies EP Gabon |
| Largo SAS vs. Boiron SA | Largo SAS vs. Hitechpros | Largo SAS vs. Credit Agricole SA | Largo SAS vs. Seche Environnem |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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