Correlation Between TotalEnergies and Eneos Holdings

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

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

Diversification Opportunities for TotalEnergies and Eneos Holdings

0.56

Correlation Coefficient

TotalEnergies  Eneos Holdings

Very weak diversification

The 3 months correlation between TotalEnergies and Eneos is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR 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 Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of TotalEnergies i.e., TotalEnergies and Eneos Holdings go up and down completely randomly.

Pair Corralation between TotalEnergies and Eneos Holdings

Assuming the 90 days horizon TotalEnergies SE is expected to under-perform the Eneos Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, TotalEnergies SE is 3.39 times less risky than Eneos Holdings. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Eneos Holdings ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,056  in Eneos Holdings ADR on September 4, 2024 and sell it today you would lose (3.00) from holding Eneos Holdings ADR or give up 0.28% of portfolio value over 90 days.

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

TotalEnergies SE  vs.  Eneos Holdings ADR

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 basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Eneos Holdings ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Eneos Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TotalEnergies and Eneos Holdings

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

The idea behind TotalEnergies SE and Eneos Holdings ADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.