Correlation Between Courtois and Technip Energies

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

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

Diversification Opportunities for Courtois and Technip Energies

-0.46

Correlation Coefficient

Courtois  Technip Energies

Very good diversification

The 3 months correlation between Courtois and Technip is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Courtois 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 Courtois 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 Courtois 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 Courtois i.e., Courtois and Technip Energies go up and down completely randomly.

Pair Corralation between Courtois and Technip Energies

Assuming the 90 days trading horizon Courtois SA is expected to under-perform the Technip Energies. But the stock apears to be less risky and, when comparing its historical volatility, Courtois SA is 1.29 times less risky than Technip Energies. The stock trades about -0.14 of its potential returns per unit of risk. The Technip Energies BV is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,526  in Technip Energies BV on October 25, 2024 and sell it today you would earn a total of  246.00  from holding Technip Energies BV or generate 9.74% return on investment over 90 days.

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

Courtois SA  vs.  Technip Energies BV

Courtois SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Courtois SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Courtois is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Technip Energies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 18 (%) 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 Courtois and Technip Energies

The main advantage of trading using opposite Courtois and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Courtois 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 Courtois 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.