Correlation Between TotalEnergies and Dekuple

Can any of the company-specific risk be diversified away by investing in both TotalEnergies and Dekuple 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 Dekuple 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 Dekuple, you can compare the effects of market volatilities on TotalEnergies and Dekuple 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 Dekuple. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Dekuple.

Diversification Opportunities for TotalEnergies and Dekuple

-0.6

Correlation Coefficient

TotalEnergies  Dekuple

Excellent diversification

The 3 months correlation between TotalEnergies and Dekuple is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Dekuple in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dekuple 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 Dekuple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dekuple has no effect on the direction of TotalEnergies i.e., TotalEnergies and Dekuple go up and down completely randomly.

Pair Corralation between TotalEnergies and Dekuple

Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 9.99 times more return on investment than Dekuple. However, TotalEnergies is 9.99 times more volatile than Dekuple. It trades about 0.26 of its potential returns per unit of risk. Dekuple is currently generating about -0.12 per unit of risk. If you would invest  12,367  in TotalEnergies EP Gabon on October 15, 2024 and sell it today you would earn a total of  3,833  from holding TotalEnergies EP Gabon or generate 30.99% return on investment over 90 days.

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

TotalEnergies EP Gabon  vs.  Dekuple

TotalEnergies EP Gabon

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 14 (%) 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.

Dekuple

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dekuple has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Dekuple is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TotalEnergies and Dekuple

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

The idea behind TotalEnergies EP Gabon and Dekuple 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..