Correlation Between Technip Energies and Boiron SA

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

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

Diversification Opportunities for Technip Energies and Boiron SA

-0.63

Correlation Coefficient

Technip Energies  Boiron SA

Excellent diversification

The 3 months correlation between Technip and Boiron is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Technip Energies BV and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and Technip Energies 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 Technip Energies BV are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of Technip Energies i.e., Technip Energies and Boiron SA go up and down completely randomly.

Pair Corralation between Technip Energies and Boiron SA

Assuming the 90 days horizon Technip Energies BV is expected to generate 1.09 times more return on investment than Boiron SA. However, Technip Energies is 1.09 times more volatile than Boiron SA. It trades about 0.24 of its potential returns per unit of risk. Boiron SA is currently generating about -0.13 per unit of risk. If you would invest  2,024  in Technip Energies BV on October 25, 2024 and sell it today you would earn a total of  744.00  from holding Technip Energies BV or generate 36.76% return on investment over 90 days.

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

Technip Energies BV  vs.  Boiron SA

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.

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron 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 forward 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.

Pair Trading with Technip Energies and Boiron SA

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

The idea behind Technip Energies BV and Boiron SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.