Correlation Between SES SA and ITV PLC
Can any of the company-specific risk be diversified away by investing in both SES SA and ITV 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 SES SA and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SES SA and ITV PLC ADR, you can compare the effects of market volatilities on SES SA and ITV 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 SES SA with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES SA and ITV PLC.
Diversification Opportunities for SES SA and ITV PLC
Poor diversification
The 3 months correlation between SES and ITV is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SES SA and ITV PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC ADR and SES SA 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 SES SA are associated (or correlated) with ITV PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV PLC ADR has no effect on the direction of SES SA i.e., SES SA and ITV PLC go up and down completely randomly.
Pair Corralation between SES SA and ITV PLC
Assuming the 90 days horizon SES SA is expected to generate 1.51 times more return on investment than ITV PLC. However, SES SA is 1.51 times more volatile than ITV PLC ADR. It trades about -0.08 of its potential returns per unit of risk. ITV PLC ADR is currently generating about -0.23 per unit of risk. If you would invest 401.00 in SES SA on August 28, 2024 and sell it today you would lose (41.00) from holding SES SA or give up 10.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SES SA vs. ITV PLC ADR
Performance |
| Timeline |
| SES SA |
| ITV PLC ADR |
SES SA and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SES SA and ITV PLC
The main advantage of trading using opposite SES SA and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SES SA position performs unexpectedly, ITV 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 ITV PLC will offset losses from the drop in ITV PLC's long position.The idea behind SES SA and ITV PLC ADR 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.| ITV PLC vs. ProSiebenSat1 Media AG | ITV PLC vs. RTL Group SA | ITV PLC vs. iHeartMedia | ITV PLC vs. TV Azteca SAB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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