Correlation Between Esso SAF and Les Docks
Can any of the company-specific risk be diversified away by investing in both Esso SAF and Les Docks 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 Les Docks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esso SAF and Les Docks des, you can compare the effects of market volatilities on Esso SAF and Les Docks 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 Les Docks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esso SAF and Les Docks.
Diversification Opportunities for Esso SAF and Les Docks
Very good diversification
The 3 months correlation between Esso and Les is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Esso SAF and Les Docks des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Docks des 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 Les Docks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Docks des has no effect on the direction of Esso SAF i.e., Esso SAF and Les Docks go up and down completely randomly.
Pair Corralation between Esso SAF and Les Docks
Assuming the 90 days horizon Esso SAF is expected to under-perform the Les Docks. But the stock apears to be less risky and, when comparing its historical volatility, Esso SAF is 1.05 times less risky than Les Docks. The stock trades about -0.07 of its potential returns per unit of risk. The Les Docks des is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 51,500 in Les Docks des on September 1, 2024 and sell it today you would earn a total of 6,500 from holding Les Docks des or generate 12.62% 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. Les Docks des
Performance |
| Timeline |
| Esso SAF |
| Les Docks des |
Esso SAF and Les Docks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esso SAF and Les Docks
The main advantage of trading using opposite Esso SAF and Les Docks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esso SAF position performs unexpectedly, Les Docks 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 Les Docks will offset losses from the drop in Les Docks' 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 |
| Les Docks vs. Malteries Franco Belges Socit | Les Docks vs. Graines Voltz SA | Les Docks vs. Esso SAF | Les Docks vs. Samse SA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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