Correlation Between Eutelsat Communications and Technip Energies

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

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

Diversification Opportunities for Eutelsat Communications and Technip Energies

-0.64

Correlation Coefficient

Eutelsat Communications  Technip Energies

Excellent diversification

The 3 months correlation between Eutelsat and Technip is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications 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 Eutelsat Communications 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 Eutelsat Communications 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 Eutelsat Communications i.e., Eutelsat Communications and Technip Energies go up and down completely randomly.

Pair Corralation between Eutelsat Communications and Technip Energies

Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Technip Energies. In addition to that, Eutelsat Communications is 1.3 times more volatile than Technip Energies BV. It trades about -0.27 of its total potential returns per unit of risk. Technip Energies BV is currently generating about 0.25 per unit of volatility. If you would invest  1,998  in Technip Energies BV on October 23, 2024 and sell it today you would earn a total of  766.00  from holding Technip Energies BV or generate 38.34% return on investment over 90 days.

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

Eutelsat Communications SA  vs.  Technip Energies BV

Eutelsat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eutelsat Communications SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Technip Energies

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 19 (%) 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 Eutelsat Communications and Technip Energies

The main advantage of trading using opposite Eutelsat Communications and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eutelsat Communications 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 Eutelsat Communications 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.