Correlation Between Crown LNG and TotalEnergies

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

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

Diversification Opportunities for Crown LNG and TotalEnergies

-0.69

Correlation Coefficient

Crown LNG  TotalEnergies

Excellent diversification

The 3 months correlation between Crown and TotalEnergies is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Crown LNG Holdings and TotalEnergies SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE ADR and Crown LNG 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 Crown LNG Holdings are associated (or correlated) with TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE ADR has no effect on the direction of Crown LNG i.e., Crown LNG and TotalEnergies go up and down completely randomly.

Pair Corralation between Crown LNG and TotalEnergies

Assuming the 90 days horizon Crown LNG Holdings is expected to generate 18.2 times more return on investment than TotalEnergies. However, Crown LNG is 18.2 times more volatile than TotalEnergies SE ADR. It trades about 0.09 of its potential returns per unit of risk. TotalEnergies SE ADR is currently generating about -0.15 per unit of risk. If you would invest  2.92  in Crown LNG Holdings on September 2, 2024 and sell it today you would lose (0.60) from holding Crown LNG Holdings or give up 20.55% of portfolio value over 90 days.

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

Crown LNG Holdings  vs.  TotalEnergies SE ADR

Crown LNG Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown LNG Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Crown LNG showed solid returns over the last few months and may actually be approaching a breakup point.

TotalEnergies SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TotalEnergies SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Crown LNG and TotalEnergies

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

The idea behind Crown LNG Holdings and TotalEnergies SE ADR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.