Correlation Between Nasdaq and Esso (Thailand)
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Esso (Thailand) 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 Nasdaq and Esso (Thailand) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Esso Public, you can compare the effects of market volatilities on Nasdaq and Esso (Thailand) 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 Nasdaq with a short position of Esso (Thailand). Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Esso (Thailand).
Diversification Opportunities for Nasdaq and Esso (Thailand)
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq and Esso is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Esso Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso (Thailand) and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Esso (Thailand). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esso (Thailand) has no effect on the direction of Nasdaq i.e., Nasdaq and Esso (Thailand) go up and down completely randomly.
Pair Corralation between Nasdaq and Esso (Thailand)
Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Esso (Thailand). But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.68 times less risky than Esso (Thailand). The stock trades about -0.19 of its potential returns per unit of risk. The Esso Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Esso Public on September 22, 2024 and sell it today you would earn a total of 0.00 from holding Esso Public or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq Inc vs. Esso Public
Performance |
| Timeline |
| Nasdaq Inc |
| Esso (Thailand) |
Nasdaq and Esso (Thailand) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Esso (Thailand)
The main advantage of trading using opposite Nasdaq and Esso (Thailand) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Esso (Thailand) 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 (Thailand) will offset losses from the drop in Esso (Thailand)'s long position.The idea behind Nasdaq Inc and Esso Public 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.| Esso (Thailand) vs. Superior Plus Corp | Esso (Thailand) vs. SIVERS SEMICONDUCTORS AB | Esso (Thailand) vs. Norsk Hydro ASA | Esso (Thailand) vs. Reliance Steel Aluminum |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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