Correlation Between Séché Environnement and Seven West
Can any of the company-specific risk be diversified away by investing in both Séché Environnement and Seven West 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 Séché Environnement and Seven West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sch Environnement SA and Seven West Media, you can compare the effects of market volatilities on Séché Environnement and Seven West 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 Séché Environnement with a short position of Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Séché Environnement and Seven West.
Diversification Opportunities for Séché Environnement and Seven West
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Séché and Seven is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sch Environnement SA and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media and Séché 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 Sch Environnement SA are associated (or correlated) with Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Séché Environnement i.e., Séché Environnement and Seven West go up and down completely randomly.
Pair Corralation between Séché Environnement and Seven West
Assuming the 90 days horizon Sch Environnement SA is expected to under-perform the Seven West. But the stock apears to be less risky and, when comparing its historical volatility, Sch Environnement SA is 3.35 times less risky than Seven West. The stock trades about -0.13 of its potential returns per unit of risk. The Seven West Media is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 9.10 in Seven West Media on October 16, 2024 and sell it today you would lose (0.95) from holding Seven West Media or give up 10.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sch Environnement SA vs. Seven West Media
Performance |
| Timeline |
| Séché Environnement |
| Seven West Media |
Séché Environnement and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Séché Environnement and Seven West
The main advantage of trading using opposite Séché Environnement and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Séché Environnement position performs unexpectedly, Seven West 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 West will offset losses from the drop in Seven West's long position.| Séché Environnement vs. 24SEVENOFFICE GROUP AB | Séché Environnement vs. USWE SPORTS AB | Séché Environnement vs. PLAYWAY SA ZY 10 | Séché Environnement vs. PLAYTIKA HOLDING DL 01 |
| Seven West vs. Yanzhou Coal Mining | Seven West vs. Sch Environnement SA | Seven West vs. DONGJIANG ENVIRONMENTAL H | Seven West vs. ANGLO ASIAN MINING |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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