Correlation Between TotalEnergies and Seche Environnement

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

By analyzing existing cross correlation between TotalEnergies SE and Seche Environnement SA, you can compare the effects of market volatilities on TotalEnergies and Seche Environnement 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 Seche Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and Seche Environnement.

Diversification Opportunities for TotalEnergies and Seche Environnement

0.62

Correlation Coefficient

TotalEnergies  Seche Environnement

Poor diversification

The 3 months correlation between TotalEnergies and Seche is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Seche Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnement 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 Seche Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnement has no effect on the direction of TotalEnergies i.e., TotalEnergies and Seche Environnement go up and down completely randomly.

Pair Corralation between TotalEnergies and Seche Environnement

Assuming the 90 days trading horizon TotalEnergies SE is expected to generate 1.18 times more return on investment than Seche Environnement. However, TotalEnergies is 1.18 times more volatile than Seche Environnement SA. It trades about 0.01 of its potential returns per unit of risk. Seche Environnement SA is currently generating about -0.01 per unit of risk. If you would invest  5,304  in TotalEnergies SE on October 11, 2024 and sell it today you would earn a total of  196.00  from holding TotalEnergies SE or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.0%
Values	Daily Returns

TotalEnergies SE  vs.  Seche Environnement SA

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 rather sound technical and fundamental indicators, TotalEnergies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Seche Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seche Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TotalEnergies and Seche Environnement

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

The idea behind TotalEnergies SE and Seche Environnement 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.