Correlation Between Txcom SA and Engie SA

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

By analyzing existing cross correlation between Txcom SA and Engie SA, you can compare the effects of market volatilities on Txcom SA and Engie SA 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 Txcom SA with a short position of Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Txcom SA and Engie SA.

Diversification Opportunities for Txcom SA and Engie SA

-0.69

Correlation Coefficient

Txcom SA  Engie SA

Excellent diversification

The 3 months correlation between Txcom and Engie is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Txcom SA and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA and Txcom SA 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 Txcom SA are associated (or correlated) with Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Txcom SA i.e., Txcom SA and Engie SA go up and down completely randomly.

Pair Corralation between Txcom SA and Engie SA

Assuming the 90 days trading horizon Txcom SA is expected to under-perform the Engie SA. But the stock apears to be less risky and, when comparing its historical volatility, Txcom SA is 1.28 times less risky than Engie SA. The stock trades about -0.16 of its potential returns per unit of risk. The Engie SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,518  in Engie SA on September 24, 2024 and sell it today you would lose (27.00) from holding Engie SA or give up 1.78% of portfolio value over 90 days.

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

Txcom SA  vs.  Engie SA

Txcom SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Txcom SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Txcom SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Engie SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Txcom SA and Engie SA

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

The idea behind Txcom SA and Engie 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 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.