Correlation Between Equatorial Energia and TechnipFMC Plc

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

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

Diversification Opportunities for Equatorial Energia and TechnipFMC Plc

0.06

Correlation Coefficient

Equatorial Energia  TechnipFMC Plc

Significant diversification

The 3 months correlation between Equatorial and TechnipFMC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Equatorial Energia SA and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc and Equatorial Energia 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 Equatorial Energia SA are associated (or correlated) with TechnipFMC Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC plc has no effect on the direction of Equatorial Energia i.e., Equatorial Energia and TechnipFMC Plc go up and down completely randomly.

Pair Corralation between Equatorial Energia and TechnipFMC Plc

Assuming the 90 days trading horizon Equatorial Energia is expected to generate 2.32 times less return on investment than TechnipFMC Plc. But when comparing it to its historical volatility, Equatorial Energia SA is 1.23 times less risky than TechnipFMC Plc. It trades about 0.06 of its potential returns per unit of risk. TechnipFMC plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  16,773  in TechnipFMC plc on April 22, 2025 and sell it today you would earn a total of  1,727  from holding TechnipFMC plc or generate 10.3% return on investment over 90 days.

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

Equatorial Energia SA  vs.  TechnipFMC plc

Equatorial Energia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equatorial Energia SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Equatorial Energia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TechnipFMC plc

Risk-Adjusted Performance

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 somewhat weak technical and fundamental indicators, TechnipFMC Plc may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Equatorial Energia and TechnipFMC Plc

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

The idea behind Equatorial Energia SA and TechnipFMC plc 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 CEOs Directory module to screen CEOs from public companies around the world.