Correlation Between Technip Energies and OVH Groupe

Can any of the company-specific risk be diversified away by investing in both Technip Energies and OVH Groupe 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 OVH Groupe 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 OVH Groupe SAS, you can compare the effects of market volatilities on Technip Energies and OVH Groupe 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 OVH Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technip Energies and OVH Groupe.

Diversification Opportunities for Technip Energies and OVH Groupe

0.53

Correlation Coefficient

Technip Energies  OVH Groupe

Very weak diversification

The 3 months correlation between Technip and OVH is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Technip Energies BV and OVH Groupe SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OVH Groupe SAS 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 OVH Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OVH Groupe SAS has no effect on the direction of Technip Energies i.e., Technip Energies and OVH Groupe go up and down completely randomly.

Pair Corralation between Technip Energies and OVH Groupe

Assuming the 90 days horizon Technip Energies is expected to generate 1.65 times less return on investment than OVH Groupe. But when comparing it to its historical volatility, Technip Energies BV is 1.07 times less risky than OVH Groupe. It trades about 0.13 of its potential returns per unit of risk. OVH Groupe SAS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  615.00  in OVH Groupe SAS on September 15, 2024 and sell it today you would earn a total of  217.00  from holding OVH Groupe SAS or generate 35.28% return on investment over 90 days.

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

Technip Energies BV  vs.  OVH Groupe SAS

Technip Energies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 10 (%) 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.

OVH Groupe SAS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OVH Groupe SAS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, OVH Groupe sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technip Energies and OVH Groupe

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

The idea behind Technip Energies BV and OVH Groupe SAS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.