Correlation Between TotalEnergies and Socit BIC

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

By analyzing existing cross correlation between TotalEnergies EP Gabon and Socit BIC SA, you can compare the effects of market volatilities on TotalEnergies and Socit BIC 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 TotalEnergies with a short position of Socit BIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Socit BIC.

Diversification Opportunities for TotalEnergies and Socit BIC

-0.24

Correlation Coefficient

TotalEnergies  Socit BIC

Very good diversification

The 3 months correlation between TotalEnergies and Socit is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Socit BIC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit BIC SA and TotalEnergies 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 TotalEnergies EP Gabon are associated (or correlated) with Socit BIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit BIC SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Socit BIC go up and down completely randomly.

Pair Corralation between TotalEnergies and Socit BIC

Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 2.96 times more return on investment than Socit BIC. However, TotalEnergies is 2.96 times more volatile than Socit BIC SA. It trades about 0.18 of its potential returns per unit of risk. Socit BIC SA is currently generating about 0.01 per unit of risk. If you would invest  13,194  in TotalEnergies EP Gabon on December 30, 2024 and sell it today you would earn a total of  5,756  from holding TotalEnergies EP Gabon or generate 43.63% return on investment over 90 days.

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

TotalEnergies EP Gabon  vs.  Socit BIC SA

TotalEnergies EP Gabon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TotalEnergies sustained solid returns over the last few months and may actually be approaching a breakup point.

Socit BIC SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TotalEnergies and Socit BIC

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

The idea behind TotalEnergies EP Gabon and Socit BIC SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.