Correlation Between TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES

Can any of the company-specific risk be diversified away by investing in both TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES 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 TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOTALENERGIES MARKETING NIGERIA and INTERNATIONAL BREWERIES PLC, you can compare the effects of market volatilities on TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES 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 TOTALENERGIES MARKETING with a short position of INTERNATIONAL BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES.

Diversification Opportunities for TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES

-0.43

Correlation Coefficient

TOTALENERGIES MARKETING  INTERNATIONAL BREWERIES

Very good diversification

The 3 months correlation between TOTALENERGIES and INTERNATIONAL is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding TOTALENERGIES MARKETING NIGERI and INTERNATIONAL BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL BREWERIES and TOTALENERGIES MARKETING 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 TOTALENERGIES MARKETING NIGERIA are associated (or correlated) with INTERNATIONAL BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL BREWERIES has no effect on the direction of TOTALENERGIES MARKETING i.e., TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES go up and down completely randomly.

Pair Corralation between TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES

Assuming the 90 days trading horizon TOTALENERGIES MARKETING NIGERIA is expected to generate 1.13 times more return on investment than INTERNATIONAL BREWERIES. However, TOTALENERGIES MARKETING is 1.13 times more volatile than INTERNATIONAL BREWERIES PLC. It trades about 0.0 of its potential returns per unit of risk. INTERNATIONAL BREWERIES PLC is currently generating about -0.1 per unit of risk. If you would invest  67,390  in TOTALENERGIES MARKETING NIGERIA on October 23, 2024 and sell it today you would lose (390.00) from holding TOTALENERGIES MARKETING NIGERIA or give up 0.58% of portfolio value over 90 days.

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

TOTALENERGIES MARKETING NIGERI  vs.  INTERNATIONAL BREWERIES PLC

TOTALENERGIES MARKETING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOTALENERGIES MARKETING NIGERIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TOTALENERGIES MARKETING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

INTERNATIONAL BREWERIES

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNATIONAL BREWERIES PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, INTERNATIONAL BREWERIES showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOTALENERGIES MARKETING and INTERNATIONAL BREWERIES

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

The idea behind TOTALENERGIES MARKETING NIGERIA and INTERNATIONAL BREWERIES PLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.