Correlation Between TotalEnergies and Nacon Sa

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

Diversification Opportunities for TotalEnergies and Nacon Sa

0.66

Correlation Coefficient

TotalEnergies  Nacon Sa

Poor diversification

The 3 months correlation between TotalEnergies and Nacon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Nacon Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nacon 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 Nacon Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nacon Sa has no effect on the direction of TotalEnergies i.e., TotalEnergies and Nacon Sa go up and down completely randomly.

Pair Corralation between TotalEnergies and Nacon Sa

Assuming the 90 days trading horizon TotalEnergies SE is expected to generate 0.43 times more return on investment than Nacon Sa. However, TotalEnergies SE is 2.34 times less risky than Nacon Sa. It trades about -0.12 of its potential returns per unit of risk. Nacon Sa is currently generating about -0.35 per unit of risk. If you would invest  6,169  in TotalEnergies SE on September 2, 2024 and sell it today you would lose (672.00) from holding TotalEnergies SE or give up 10.89% of portfolio value over 90 days.

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

TotalEnergies SE  vs.  Nacon 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.

Nacon Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nacon Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with TotalEnergies and Nacon Sa

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

The idea behind TotalEnergies SE and Nacon 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.