Correlation Between TotalEnergies and Cerinnov Group

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

Diversification Opportunities for TotalEnergies and Cerinnov Group

-0.74

Correlation Coefficient

TotalEnergies  Cerinnov Group

Pay attention - limited upside

The 3 months correlation between TotalEnergies and Cerinnov is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies EP Gabon and Cerinnov Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerinnov Group 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 EP Gabon are associated (or correlated) with Cerinnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerinnov Group SA has no effect on the direction of TotalEnergies i.e., TotalEnergies and Cerinnov Group go up and down completely randomly.

Pair Corralation between TotalEnergies and Cerinnov Group

Assuming the 90 days horizon TotalEnergies EP Gabon is expected to generate 0.44 times more return on investment than Cerinnov Group. However, TotalEnergies EP Gabon is 2.26 times less risky than Cerinnov Group. It trades about 0.15 of its potential returns per unit of risk. Cerinnov Group SA is currently generating about -0.05 per unit of risk. If you would invest  15,850  in TotalEnergies EP Gabon on September 27, 2024 and sell it today you would earn a total of  3,800  from holding TotalEnergies EP Gabon or generate 23.97% 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.  Cerinnov Group SA

TotalEnergies EP Gabon

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TotalEnergies EP Gabon are ranked lower than 11 (%) 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.

Cerinnov Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerinnov Group 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 Cerinnov Group

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

The idea behind TotalEnergies EP Gabon and Cerinnov Group 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.