Correlation Between SEB SA and Arkema SA
Can any of the company-specific risk be diversified away by investing in both SEB SA and Arkema SA 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 SEB SA and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEB SA and Arkema SA, you can compare the effects of market volatilities on SEB SA and Arkema SA 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 SEB SA with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEB SA and Arkema SA.
Diversification Opportunities for SEB SA and Arkema SA
Very poor diversification
The 3 months correlation between SEB and Arkema is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and SEB 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 SEB SA are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of SEB SA i.e., SEB SA and Arkema SA go up and down completely randomly.
Pair Corralation between SEB SA and Arkema SA
Assuming the 90 days horizon SEB SA is expected to under-perform the Arkema SA. In addition to that, SEB SA is 1.06 times more volatile than Arkema SA. It trades about -0.03 of its total potential returns per unit of risk. Arkema SA is currently generating about -0.03 per unit of volatility. If you would invest 8,890 in Arkema SA on September 2, 2024 and sell it today you would lose (1,390) from holding Arkema SA or give up 15.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEB SA vs. Arkema SA
Performance |
| Timeline |
| SEB SA |
| Arkema SA |
SEB SA and Arkema SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEB SA and Arkema SA
The main advantage of trading using opposite SEB SA and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA position performs unexpectedly, Arkema SA 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 Arkema SA will offset losses from the drop in Arkema SA's long position.| SEB SA vs. LVMH Mot Hennessy | SEB SA vs. Danone SA | SEB SA vs. Air Liquide SA | SEB SA vs. Hermes International SCA |
| Arkema SA vs. Voltalia SA | Arkema SA vs. Ecoslops SA | Arkema SA vs. Agripower France Sa | Arkema SA vs. Enertime SAS |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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