Correlation Between TotalEnergies and Origin Energy

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

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

Diversification Opportunities for TotalEnergies and Origin Energy

-0.53

Correlation Coefficient

TotalEnergies  Origin Energy

Excellent diversification

The 3 months correlation between TotalEnergies and Origin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE ADR and Origin Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy 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 ADR are associated (or correlated) with Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy has no effect on the direction of TotalEnergies i.e., TotalEnergies and Origin Energy go up and down completely randomly.

Pair Corralation between TotalEnergies and Origin Energy

Considering the 90-day investment horizon TotalEnergies SE ADR is expected to under-perform the Origin Energy. But the stock apears to be less risky and, when comparing its historical volatility, TotalEnergies SE ADR is 1.11 times less risky than Origin Energy. The stock trades about -0.21 of its potential returns per unit of risk. The Origin Energy Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Origin Energy Ltd on September 15, 2024 and sell it today you would earn a total of  25.00  from holding Origin Energy Ltd or generate 4.0% return on investment over 90 days.

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

TotalEnergies SE ADR  vs.  Origin Energy Ltd

TotalEnergies SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TotalEnergies SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Origin Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Energy Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Origin Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TotalEnergies and Origin Energy

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

The idea behind TotalEnergies SE ADR and Origin Energy Ltd 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.