Correlation Between Hellenic Petroleum and Exxon

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

By analyzing existing cross correlation between Hellenic Petroleum SA and Exxon Mobil Corp, you can compare the effects of market volatilities on Hellenic Petroleum and Exxon 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 Hellenic Petroleum with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hellenic Petroleum and Exxon.

Diversification Opportunities for Hellenic Petroleum and Exxon

0.71

Correlation Coefficient

Hellenic Petroleum  Exxon

Poor diversification

The 3 months correlation between Hellenic and Exxon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hellenic Petroleum SA and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Hellenic Petroleum 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 Hellenic Petroleum SA are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Hellenic Petroleum i.e., Hellenic Petroleum and Exxon go up and down completely randomly.

Pair Corralation between Hellenic Petroleum and Exxon

Assuming the 90 days horizon Hellenic Petroleum is expected to generate 5.18 times less return on investment than Exxon. But when comparing it to its historical volatility, Hellenic Petroleum SA is 2.99 times less risky than Exxon. It trades about 0.22 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  11,379  in Exxon Mobil Corp on January 26, 2024 and sell it today you would earn a total of  726.00  from holding Exxon Mobil Corp or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hellenic Petroleum SA  vs.  Exxon Mobil Corp

Hellenic Petroleum

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hellenic Petroleum SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Hellenic Petroleum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Exxon Mobil Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hellenic Petroleum and Exxon

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

The idea behind Hellenic Petroleum SA and Exxon Mobil Corp 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.