Correlation Between TotalEnergies and Adomos SA

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

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

Diversification Opportunities for TotalEnergies and Adomos SA

0.17

Correlation Coefficient

TotalEnergies  Adomos SA

Average diversification

The 3 months correlation between TotalEnergies and Adomos is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Adomos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adomos SA 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 Adomos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adomos SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Adomos SA go up and down completely randomly.

Pair Corralation between TotalEnergies and Adomos SA

Assuming the 90 days trading horizon TotalEnergies SE is expected to under-perform the Adomos SA. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 11.56 times less risky than Adomos SA. The stock trades about -0.13 of its potential returns per unit of risk. The Adomos SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Adomos SA on October 13, 2024 and sell it today you would earn a total of  0.00  from holding Adomos SA or generate 0.0% return on investment over 90 days.

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

TotalEnergies SE  vs.  Adomos 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. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Adomos SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adomos SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adomos SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TotalEnergies and Adomos SA

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

The idea behind TotalEnergies SE and Adomos 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.