Correlation Between Carrefour and SEVEN+I HLDGS

Can any of the company-specific risk be diversified away by investing in both Carrefour and SEVEN+I HLDGS 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 Carrefour and SEVEN+I HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carrefour SA and SEVENI HLDGS UNSPADR12, you can compare the effects of market volatilities on Carrefour and SEVEN+I HLDGS 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 Carrefour with a short position of SEVEN+I HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and SEVEN+I HLDGS.

Diversification Opportunities for Carrefour and SEVEN+I HLDGS

0.41

Correlation Coefficient

Carrefour  SEVEN+I HLDGS

Very weak diversification

The 3 months correlation between Carrefour and SEVEN+I is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and SEVENI HLDGS UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEVENI HLDGS UNSPADR12 and Carrefour 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 Carrefour SA are associated (or correlated) with SEVEN+I HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEVENI HLDGS UNSPADR12 has no effect on the direction of Carrefour i.e., Carrefour and SEVEN+I HLDGS go up and down completely randomly.

Pair Corralation between Carrefour and SEVEN+I HLDGS

Assuming the 90 days horizon Carrefour SA is expected to under-perform the SEVEN+I HLDGS. In addition to that, Carrefour is 1.14 times more volatile than SEVENI HLDGS UNSPADR12. It trades about -0.1 of its total potential returns per unit of risk. SEVENI HLDGS UNSPADR12 is currently generating about 0.0 per unit of volatility. If you would invest  1,250  in SEVENI HLDGS UNSPADR12 on September 29, 2024 and sell it today you would lose (10.00) from holding SEVENI HLDGS UNSPADR12 or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Carrefour SA  vs.  SEVENI HLDGS UNSPADR12

Carrefour SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SEVENI HLDGS UNSPADR12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEVENI HLDGS UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SEVEN+I HLDGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carrefour and SEVEN+I HLDGS

The main advantage of trading using opposite Carrefour and SEVEN+I HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour position performs unexpectedly, SEVEN+I HLDGS 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+I HLDGS will offset losses from the drop in SEVEN+I HLDGS's long position.

The idea behind Carrefour SA and SEVENI HLDGS UNSPADR12 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.