Correlation Between Technip Energies and Compagnie

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

Diversification Opportunities for Technip Energies and Compagnie

0.26

Correlation Coefficient

Technip Energies  Compagnie

Modest diversification

The 3 months correlation between Technip and Compagnie is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Technip Energies BV and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Technip Energies i.e., Technip Energies and Compagnie go up and down completely randomly.

Pair Corralation between Technip Energies and Compagnie

Assuming the 90 days horizon Technip Energies BV is expected to generate 1.42 times more return on investment than Compagnie. However, Technip Energies is 1.42 times more volatile than Compagnie de Saint Gobain. It trades about 0.06 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.08 per unit of risk. If you would invest  1,592  in Technip Energies BV on October 12, 2024 and sell it today you would earn a total of  1,102  from holding Technip Energies BV or generate 69.22% return on investment over 90 days.

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

Technip Energies BV  vs.  Compagnie de Saint Gobain

Technip Energies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 15 (%) 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.

Compagnie de Saint

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Compagnie is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Technip Energies and Compagnie

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

The idea behind Technip Energies BV and Compagnie de Saint Gobain 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.