Correlation Between ESGL Holdings and Rollins

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

By analyzing existing cross correlation between ESGL Holdings Limited and Rollins, you can compare the effects of market volatilities on ESGL Holdings and Rollins 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 ESGL Holdings with a short position of Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Rollins.

Diversification Opportunities for ESGL Holdings and Rollins

-0.29

Correlation Coefficient

ESGL Holdings  Rollins

Very good diversification

The 3 months correlation between ESGL and Rollins is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Rollins go up and down completely randomly.

Pair Corralation between ESGL Holdings and Rollins

Given the investment horizon of 90 days ESGL Holdings Limited is expected to under-perform the Rollins. In addition to that, ESGL Holdings is 4.33 times more volatile than Rollins. It trades about -0.05 of its total potential returns per unit of risk. Rollins is currently generating about 0.05 per unit of volatility. If you would invest  3,457  in Rollins on February 6, 2024 and sell it today you would earn a total of  1,228  from holding Rollins or generate 35.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ESGL Holdings Limited  vs.  Rollins

ESGL Holdings Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, ESGL Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rollins

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rollins are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Rollins may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with ESGL Holdings and Rollins

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

The idea behind ESGL Holdings Limited and Rollins 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.