Correlation Between Technip Energies and Soditech

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

Diversification Opportunities for Technip Energies and Soditech

-0.23

Correlation Coefficient

Technip Energies  Soditech

Very good diversification

The 3 months correlation between Technip and Soditech is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Technip Energies BV and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech 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 Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Technip Energies i.e., Technip Energies and Soditech go up and down completely randomly.

Pair Corralation between Technip Energies and Soditech

Assuming the 90 days horizon Technip Energies BV is expected to generate 0.61 times more return on investment than Soditech. However, Technip Energies BV is 1.64 times less risky than Soditech. It trades about 0.21 of its potential returns per unit of risk. Soditech SA is currently generating about 0.07 per unit of risk. If you would invest  2,060  in Technip Energies BV on October 22, 2024 and sell it today you would earn a total of  662.00  from holding Technip Energies BV or generate 32.14% return on investment over 90 days.

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

Technip Energies BV  vs.  Soditech SA

Technip Energies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 16 (%) 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.

Soditech SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Soditech SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Soditech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technip Energies and Soditech

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

The idea behind Technip Energies BV and Soditech 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.