Correlation Between Boiron SA and Technip Energies

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

By analyzing existing cross correlation between Boiron SA and Technip Energies BV, you can compare the effects of market volatilities on Boiron SA and Technip Energies 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 Boiron SA with a short position of Technip Energies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boiron SA and Technip Energies.

Diversification Opportunities for Boiron SA and Technip Energies

-0.63

Correlation Coefficient

Boiron SA  Technip Energies

Excellent diversification

The 3 months correlation between Boiron and Technip is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Boiron SA and Technip Energies BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and Boiron SA 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 Boiron SA are associated (or correlated) with Technip Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technip Energies has no effect on the direction of Boiron SA i.e., Boiron SA and Technip Energies go up and down completely randomly.

Pair Corralation between Boiron SA and Technip Energies

Assuming the 90 days trading horizon Boiron SA is expected to under-perform the Technip Energies. But the stock apears to be less risky and, when comparing its historical volatility, Boiron SA is 1.09 times less risky than Technip Energies. The stock trades about -0.13 of its potential returns per unit of risk. The Technip Energies BV is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,024  in Technip Energies BV on October 25, 2024 and sell it today you would earn a total of  744.00  from holding Technip Energies BV or generate 36.76% return on investment over 90 days.

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

Boiron SA  vs.  Technip Energies BV

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Technip Energies

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Technip Energies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boiron SA and Technip Energies

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

The idea behind Boiron SA and Technip Energies BV 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.