Correlation Between TotalEnergies and Carmat

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

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

Diversification Opportunities for TotalEnergies and Carmat

-0.68

Correlation Coefficient

TotalEnergies  Carmat

Excellent diversification

The 3 months correlation between TotalEnergies and Carmat is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Carmat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat 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 EP Gabon are associated (or correlated) with Carmat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat has no effect on the direction of TotalEnergies i.e., TotalEnergies and Carmat go up and down completely randomly.

Pair Corralation between TotalEnergies and Carmat

Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 0.48 times more return on investment than Carmat. However, TotalEnergies EP Gabon is 2.07 times less risky than Carmat. It trades about 0.14 of its potential returns per unit of risk. Carmat is currently generating about -0.13 per unit of risk. If you would invest  15,950  in TotalEnergies EP Gabon on September 24, 2024 and sell it today you would earn a total of  3,550  from holding TotalEnergies EP Gabon or generate 22.26% return on investment over 90 days.

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

TotalEnergies EP Gabon  vs.  Carmat

TotalEnergies EP Gabon

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TotalEnergies sustained solid returns over the last few months and may actually be approaching a breakup point.

Carmat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carmat 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 Carmat

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

The idea behind TotalEnergies EP Gabon and Carmat 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.