Correlation Between TotalEnergies and Hoteles City

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

By analyzing existing cross correlation between TotalEnergies SE and Hoteles City Express, you can compare the effects of market volatilities on TotalEnergies and Hoteles City 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 with a short position of Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Hoteles City.

Diversification Opportunities for TotalEnergies and Hoteles City

0.27

Correlation Coefficient

TotalEnergies  Hoteles City

Modest diversification

The 3 months correlation between TotalEnergies and Hoteles is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express and TotalEnergies 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 SE are associated (or correlated) with Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of TotalEnergies i.e., TotalEnergies and Hoteles City go up and down completely randomly.

Pair Corralation between TotalEnergies and Hoteles City

Assuming the 90 days trading horizon TotalEnergies SE is expected to generate 0.58 times more return on investment than Hoteles City. However, TotalEnergies SE is 1.72 times less risky than Hoteles City. It trades about -0.01 of its potential returns per unit of risk. Hoteles City Express is currently generating about -0.05 per unit of risk. If you would invest  118,090  in TotalEnergies SE on September 25, 2024 and sell it today you would lose (9,140) from holding TotalEnergies SE or give up 7.74% of portfolio value over 90 days.

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

TotalEnergies SE  vs.  Hoteles City Express

TotalEnergies SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TotalEnergies SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hoteles City Express

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hoteles City Express are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Hoteles City is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TotalEnergies and Hoteles City

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

The idea behind TotalEnergies SE and Hoteles City Express 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.