Correlation Between Seche Environnement and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Seche Environnement and Summit Materials 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 Seche Environnement and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seche Environnement SA and Summit Materials Cl, you can compare the effects of market volatilities on Seche Environnement and Summit Materials 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 Seche Environnement with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seche Environnement and Summit Materials.
Diversification Opportunities for Seche Environnement and Summit Materials
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seche and Summit is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Seche Environnement 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 Seche Environnement SA are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Seche Environnement i.e., Seche Environnement and Summit Materials go up and down completely randomly.
Pair Corralation between Seche Environnement and Summit Materials
Assuming the 90 days trading horizon Seche Environnement SA is expected to under-perform the Summit Materials. But the stock apears to be less risky and, when comparing its historical volatility, Seche Environnement SA is 1.2 times less risky than Summit Materials. The stock trades about -0.08 of its potential returns per unit of risk. The Summit Materials Cl is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,847 in Summit Materials Cl on August 31, 2024 and sell it today you would earn a total of 1,254 from holding Summit Materials Cl or generate 32.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Seche Environnement SA vs. Summit Materials Cl
Performance |
| Timeline |
| Seche Environnement |
| Summit Materials |
Seche Environnement and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seche Environnement and Summit Materials
The main advantage of trading using opposite Seche Environnement and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seche Environnement position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Seche Environnement vs. Neometals | Seche Environnement vs. Coor Service Management | Seche Environnement vs. Aeorema Communications Plc | Seche Environnement vs. JLEN Environmental Assets |
| Summit Materials vs. The Mercantile Investment | Summit Materials vs. National Beverage Corp | Summit Materials vs. Capital Drilling | Summit Materials vs. Bankers Investment Trust |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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