Correlation Between Buyer Group and Technip Energies

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

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

Diversification Opportunities for Buyer Group and Technip Energies

0.76

Correlation Coefficient

Buyer Group  Technip Energies

Poor diversification

The 3 months correlation between Buyer and Technip is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Buyer Group International and Technip Energies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and Buyer Group 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 Buyer Group International 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 Buyer Group i.e., Buyer Group and Technip Energies go up and down completely randomly.

Pair Corralation between Buyer Group and Technip Energies

Given the investment horizon of 90 days Buyer Group International is expected to generate 3.88 times more return on investment than Technip Energies. However, Buyer Group is 3.88 times more volatile than Technip Energies NV. It trades about 0.14 of its potential returns per unit of risk. Technip Energies NV is currently generating about 0.15 per unit of risk. If you would invest  0.14  in Buyer Group International on December 20, 2024 and sell it today you would earn a total of  0.09  from holding Buyer Group International or generate 64.29% return on investment over 90 days.

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

Buyer Group International  vs.  Technip Energies NV

Buyer Group International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Buyer Group International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Buyer Group reported solid returns over the last few months and may actually be approaching a breakup point.

Technip Energies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Technip Energies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Buyer Group and Technip Energies

The main advantage of trading using opposite Buyer Group and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buyer Group 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 Buyer Group International and Technip Energies NV 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.