Correlation Between Getlink SE and Technip Energies

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

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

Diversification Opportunities for Getlink SE and Technip Energies

-0.59

Correlation Coefficient

Getlink SE  Technip Energies

Excellent diversification

The 3 months correlation between Getlink and Technip is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and Technip Energies BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and Getlink SE 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 Getlink SE 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 Getlink SE i.e., Getlink SE and Technip Energies go up and down completely randomly.

Pair Corralation between Getlink SE and Technip Energies

Assuming the 90 days trading horizon Getlink SE is expected to generate 8.66 times less return on investment than Technip Energies. But when comparing it to its historical volatility, Getlink SE is 1.91 times less risky than Technip Energies. It trades about 0.01 of its potential returns per unit of risk. Technip Energies BV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,592  in Technip Energies BV on October 12, 2024 and sell it today you would earn a total of  1,102  from holding Technip Energies BV or generate 69.22% return on investment over 90 days.

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

Getlink SE  vs.  Technip Energies BV

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Technip Energies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 15 (%) 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 Getlink SE and Technip Energies

The main advantage of trading using opposite Getlink SE and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getlink SE 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 Getlink SE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.