Correlation Between Seven I and Carrefour

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

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

Diversification Opportunities for Seven I and Carrefour

-0.69

Correlation Coefficient

Seven I  Carrefour

Excellent diversification

The 3 months correlation between Seven and Carrefour is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA and Seven I 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 i Holdings are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of Seven I i.e., Seven I and Carrefour go up and down completely randomly.

Pair Corralation between Seven I and Carrefour

Assuming the 90 days horizon Seven i Holdings is expected to generate 0.79 times more return on investment than Carrefour. However, Seven i Holdings is 1.27 times less risky than Carrefour. It trades about -0.22 of its potential returns per unit of risk. Carrefour SA is currently generating about -0.18 per unit of risk. If you would invest  1,561  in Seven i Holdings on September 27, 2024 and sell it today you would lose (96.00) from holding Seven i Holdings or give up 6.15% of portfolio value over 90 days.

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

Seven i Holdings  vs.  Carrefour SA

Seven i Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Seven I may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Seven I and Carrefour

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

The idea behind Seven i Holdings and Carrefour SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.