Correlation Between Seven West and KORIAN (KO2SG)
Can any of the company-specific risk be diversified away by investing in both Seven West and KORIAN (KO2SG) 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 Seven West and KORIAN (KO2SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and KORIAN, you can compare the effects of market volatilities on Seven West and KORIAN (KO2SG) 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 Seven West with a short position of KORIAN (KO2SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and KORIAN (KO2SG).
Diversification Opportunities for Seven West and KORIAN (KO2SG)
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seven and KORIAN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and KORIAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORIAN (KO2SG) and Seven West 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 Seven West Media are associated (or correlated) with KORIAN (KO2SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORIAN (KO2SG) has no effect on the direction of Seven West i.e., Seven West and KORIAN (KO2SG) go up and down completely randomly.
Pair Corralation between Seven West and KORIAN (KO2SG)
Assuming the 90 days horizon Seven West Media is expected to under-perform the KORIAN (KO2SG). But the stock apears to be less risky and, when comparing its historical volatility, Seven West Media is 1.2 times less risky than KORIAN (KO2SG). The stock trades about -0.05 of its potential returns per unit of risk. The KORIAN is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 172.00 in KORIAN on September 2, 2024 and sell it today you would earn a total of 13.00 from holding KORIAN or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
Seven West Media vs. KORIAN
Performance |
| Timeline |
| Seven West Media |
| KORIAN (KO2SG) |
Seven West and KORIAN (KO2SG) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and KORIAN (KO2SG)
The main advantage of trading using opposite Seven West and KORIAN (KO2SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, KORIAN (KO2SG) 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 KORIAN (KO2SG) will offset losses from the drop in KORIAN (KO2SG)'s long position.| Seven West vs. Rai Way SpA | Seven West vs. Superior Plus Corp | Seven West vs. NMI Holdings | Seven West vs. Origin Agritech |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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