Correlation Between Soditech and Technip Energies
Can any of the company-specific risk be diversified away by investing in both Soditech and Technip Energies 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 Soditech and Technip Energies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and Technip Energies BV, you can compare the effects of market volatilities on Soditech and Technip Energies 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 Soditech with a short position of Technip Energies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Technip Energies.
Diversification Opportunities for Soditech and Technip Energies
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Soditech and Technip is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Technip Energies BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies and Soditech 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 Soditech SA are associated (or correlated) with Technip Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technip Energies has no effect on the direction of Soditech i.e., Soditech and Technip Energies go up and down completely randomly.
Pair Corralation between Soditech and Technip Energies
Assuming the 90 days trading horizon Soditech is expected to generate 4.83 times less return on investment than Technip Energies. In addition to that, Soditech is 1.84 times more volatile than Technip Energies BV. It trades about 0.02 of its total potential returns per unit of risk. Technip Energies BV is currently generating about 0.15 per unit of volatility. If you would invest 2,104 in Technip Energies BV on September 13, 2024 and sell it today you would earn a total of 332.00 from holding Technip Energies BV or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soditech SA vs. Technip Energies BV
Performance |
| Timeline |
| Soditech SA |
| Technip Energies |
Soditech and Technip Energies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soditech and Technip Energies
The main advantage of trading using opposite Soditech and Technip Energies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Technip Energies 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 Technip Energies will offset losses from the drop in Technip Energies' long position.The idea behind Soditech SA and Technip Energies BV 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.| Technip Energies vs. Gaztransport Technigaz SAS | Technip Energies vs. TotalEnergies SE | Technip Energies vs. Neoen SA | Technip Energies vs. Rubis SCA |
Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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