Correlation Between TotalEnergies and Groupe JAJ

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

Diversification Opportunities for TotalEnergies and Groupe JAJ

-0.59

Correlation Coefficient

TotalEnergies  Groupe JAJ

Excellent diversification

The 3 months correlation between TotalEnergies and Groupe is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Groupe JAJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe JAJ 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 Groupe JAJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe JAJ has no effect on the direction of TotalEnergies i.e., TotalEnergies and Groupe JAJ go up and down completely randomly.

Pair Corralation between TotalEnergies and Groupe JAJ

Assuming the 90 days horizon TotalEnergies is expected to generate 1.16 times less return on investment than Groupe JAJ. But when comparing it to its historical volatility, TotalEnergies EP Gabon is 4.12 times less risky than Groupe JAJ. It trades about 0.1 of its potential returns per unit of risk. Groupe JAJ is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Groupe JAJ on September 16, 2024 and sell it today you would lose (17.00) from holding Groupe JAJ or give up 14.78% of portfolio value over 90 days.

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

TotalEnergies EP Gabon  vs.  Groupe JAJ

TotalEnergies EP Gabon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 8 (%) 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.

Groupe JAJ

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe JAJ are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Groupe JAJ sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TotalEnergies and Groupe JAJ

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

The idea behind TotalEnergies EP Gabon and Groupe JAJ 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.