Correlation Between SEB SA and Genfit
Can any of the company-specific risk be diversified away by investing in both SEB SA and Genfit 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 Genfit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEB SA and Genfit, you can compare the effects of market volatilities on SEB SA and Genfit 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 Genfit. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEB SA and Genfit.
Diversification Opportunities for SEB SA and Genfit
Poor diversification
The 3 months correlation between SEB and Genfit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit 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 Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of SEB SA i.e., SEB SA and Genfit go up and down completely randomly.
Pair Corralation between SEB SA and Genfit
Assuming the 90 days horizon SEB SA is expected to generate 0.57 times more return on investment than Genfit. However, SEB SA is 1.76 times less risky than Genfit. It trades about -0.17 of its potential returns per unit of risk. Genfit is currently generating about -0.38 per unit of risk. If you would invest 9,750 in SEB SA on August 31, 2024 and sell it today you would lose (770.00) from holding SEB SA or give up 7.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SEB SA vs. Genfit
Performance |
| Timeline |
| SEB SA |
| Genfit |
SEB SA and Genfit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEB SA and Genfit
The main advantage of trading using opposite SEB SA and Genfit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA position performs unexpectedly, Genfit 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 Genfit will offset losses from the drop in Genfit's long position.The idea behind SEB SA and Genfit 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.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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