Correlation Between TechnipFMC PLC and TechPrecision Common

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

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

Diversification Opportunities for TechnipFMC PLC and TechPrecision Common

-0.08

Correlation Coefficient

TechnipFMC PLC  TechPrecision Common

Good diversification

The 3 months correlation between TechnipFMC and TechPrecision is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and TechPrecision Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechPrecision Common and TechnipFMC PLC 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 TechnipFMC PLC are associated (or correlated) with TechPrecision Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechPrecision Common has no effect on the direction of TechnipFMC PLC i.e., TechnipFMC PLC and TechPrecision Common go up and down completely randomly.

Pair Corralation between TechnipFMC PLC and TechPrecision Common

Considering the 90-day investment horizon TechnipFMC PLC is expected to generate 0.23 times more return on investment than TechPrecision Common. However, TechnipFMC PLC is 4.33 times less risky than TechPrecision Common. It trades about 0.11 of its potential returns per unit of risk. TechPrecision Common is currently generating about -0.02 per unit of risk. If you would invest  2,163  in TechnipFMC PLC on March 7, 2024 and sell it today you would earn a total of  263.00  from holding TechnipFMC PLC or generate 12.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

TechnipFMC PLC  vs.  TechPrecision Common

TechnipFMC PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, TechnipFMC PLC may actually be approaching a critical reversion point that can send shares even higher in July 2024.

TechPrecision Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TechPrecision Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TechnipFMC PLC and TechPrecision Common

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

The idea behind TechnipFMC PLC and TechPrecision Common 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.