Correlation Between TechnipFMC PLC and ProSiebenSat1 Media

Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC and ProSiebenSat1 Media 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 TechnipFMC PLC and ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TechnipFMC PLC and ProSiebenSat1 Media AG, you can compare the effects of market volatilities on TechnipFMC PLC and ProSiebenSat1 Media 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 TechnipFMC PLC with a short position of ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and ProSiebenSat1 Media.

Diversification Opportunities for TechnipFMC PLC and ProSiebenSat1 Media

-0.55

Correlation Coefficient

TechnipFMC PLC  ProSiebenSat1 Media

Excellent diversification

The 3 months correlation between TechnipFMC and ProSiebenSat1 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and ProSiebenSat1 Media AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media and TechnipFMC PLC 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 TechnipFMC PLC are associated (or correlated) with ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and ProSiebenSat1 Media go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and ProSiebenSat1 Media

Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 0.72 times more return on investment than ProSiebenSat1 Media. However, TechnipFMC PLC is 1.39 times less risky than ProSiebenSat1 Media. It trades about 0.16 of its potential returns per unit of risk. ProSiebenSat1 Media AG is currently generating about -0.15 per unit of risk. If you would invest  2,545  in TechnipFMC PLC on September 3, 2024 and sell it today you would earn a total of  592.00  from holding TechnipFMC PLC or generate 23.26% return on investment over 90 days.

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

TechnipFMC PLC  vs.  ProSiebenSat1 Media AG

TechnipFMC PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, TechnipFMC PLC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ProSiebenSat1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSiebenSat1 Media AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TechnipFMC PLC and ProSiebenSat1 Media

The main advantage of trading using opposite TechnipFMC PLC and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.

The idea behind TechnipFMC PLC and ProSiebenSat1 Media AG 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.