Correlation Between TechnipFMC PLC and Prosafe SE

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

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

Diversification Opportunities for TechnipFMC PLC and Prosafe SE

-0.92

Correlation Coefficient

TechnipFMC PLC  Prosafe SE

Pay attention - limited upside

The 3 months correlation between TechnipFMC and Prosafe is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Prosafe SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosafe SE and TechnipFMC PLC 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 TechnipFMC PLC are associated (or correlated) with Prosafe SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosafe SE has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and Prosafe SE go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and Prosafe SE

Assuming the 90 days horizon TechnipFMC PLC is expected to generate 0.49 times more return on investment than Prosafe SE. However, TechnipFMC PLC is 2.05 times less risky than Prosafe SE. It trades about 0.09 of its potential returns per unit of risk. Prosafe SE is currently generating about -0.1 per unit of risk. If you would invest  1,089  in TechnipFMC PLC on September 20, 2024 and sell it today you would earn a total of  1,685  from holding TechnipFMC PLC or generate 154.73% return on investment over 90 days.

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

TechnipFMC PLC  vs.  Prosafe SE

TechnipFMC PLC

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TechnipFMC PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TechnipFMC PLC and Prosafe SE

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

The idea behind TechnipFMC PLC and Prosafe SE 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.