Correlation Between Saipem SpA and Technip Energies

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

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

Diversification Opportunities for Saipem SpA and Technip Energies

-0.65

Correlation Coefficient

Saipem SpA  Technip Energies

Excellent diversification

The 3 months correlation between Saipem and Technip is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Saipem SpA and Technip Energies NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and Saipem SpA 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 Saipem SpA 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 Saipem SpA i.e., Saipem SpA and Technip Energies go up and down completely randomly.

Pair Corralation between Saipem SpA and Technip Energies

Assuming the 90 days horizon Saipem SpA is expected to under-perform the Technip Energies. In addition to that, Saipem SpA is 1.01 times more volatile than Technip Energies NV. It trades about -0.11 of its total potential returns per unit of risk. Technip Energies NV is currently generating about 0.15 per unit of volatility. If you would invest  2,600  in Technip Energies NV on December 21, 2024 and sell it today you would earn a total of  521.00  from holding Technip Energies NV or generate 20.04% return on investment over 90 days.

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

Saipem SpA  vs.  Technip Energies NV

Saipem SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saipem SpA 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 primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Technip Energies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Technip Energies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saipem SpA and Technip Energies

The main advantage of trading using opposite Saipem SpA and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saipem SpA 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 Saipem SpA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.