Correlation Between Carrefour and Seven I
Can any of the company-specific risk be diversified away by investing in both Carrefour and Seven I 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 Carrefour and Seven I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA and Seven i Holdings, you can compare the effects of market volatilities on Carrefour and Seven I 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 Carrefour with a short position of Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and Seven I.
Diversification Opportunities for Carrefour and Seven I
Good diversification
The 3 months correlation between Carrefour and Seven is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings and Carrefour 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 Carrefour SA are associated (or correlated) with Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Carrefour i.e., Carrefour and Seven I go up and down completely randomly.
Pair Corralation between Carrefour and Seven I
Assuming the 90 days horizon Carrefour is expected to generate 19.02 times less return on investment than Seven I. But when comparing it to its historical volatility, Carrefour SA is 1.75 times less risky than Seven I. It trades about 0.01 of its potential returns per unit of risk. Seven i Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Seven i Holdings on September 3, 2024 and sell it today you would earn a total of 304.00 from holding Seven i Holdings or generate 23.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.21% |
| Values | Daily Returns |
Carrefour SA vs. Seven i Holdings
Performance |
| Timeline |
| Carrefour SA |
| Seven i Holdings |
Carrefour and Seven I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrefour and Seven I
The main advantage of trading using opposite Carrefour and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour position performs unexpectedly, Seven I 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 Seven I will offset losses from the drop in Seven I's long position.| Carrefour vs. J Sainsbury plc | Carrefour vs. Om Holdings International | Carrefour vs. Carrefour SA PK | Carrefour vs. Kesko Oyj ADR |
| Seven I vs. Kesko Oyj ADR | Seven I vs. Om Holdings International | Seven I vs. Tesco PLC | Seven I vs. Carrefour SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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