Correlation Between Oceaneering International and Technip Energies

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

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

Diversification Opportunities for Oceaneering International and Technip Energies

0.28

Correlation Coefficient

Oceaneering International  Technip Energies

Modest diversification

The 3 months correlation between Oceaneering and Technip is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oceaneering International and Technip Energies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and Oceaneering International 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 Oceaneering International 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 Oceaneering International i.e., Oceaneering International and Technip Energies go up and down completely randomly.

Pair Corralation between Oceaneering International and Technip Energies

Considering the 90-day investment horizon Oceaneering International is expected to generate 3.79 times less return on investment than Technip Energies. But when comparing it to its historical volatility, Oceaneering International is 1.71 times less risky than Technip Energies. It trades about 0.06 of its potential returns per unit of risk. Technip Energies NV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,483  in Technip Energies NV on October 9, 2024 and sell it today you would earn a total of  182.00  from holding Technip Energies NV or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Oceaneering International  vs.  Technip Energies NV

Oceaneering International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Oceaneering International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Technip Energies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Technip Energies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Oceaneering International and Technip Energies

The main advantage of trading using opposite Oceaneering International and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceaneering International 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 Oceaneering International and Technip Energies NV 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.