Correlation Between Seven I and SEVEN+I HLDGS

Can any of the company-specific risk be diversified away by investing in both Seven I 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 Seven I 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 Seven i Holdings and SEVENI HLDGS UNSPADR12, you can compare the effects of market volatilities on Seven I 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 Seven I with a short position of SEVEN+I HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven I and SEVEN+I HLDGS.

Diversification Opportunities for Seven I and SEVEN+I HLDGS

-0.38

Correlation Coefficient

Seven I  SEVEN+I HLDGS

Very good diversification

The 3 months correlation between Seven and SEVEN+I is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings 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 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 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 Seven I i.e., Seven I and SEVEN+I HLDGS go up and down completely randomly.

Pair Corralation between Seven I and SEVEN+I HLDGS

Assuming the 90 days horizon Seven I is expected to generate 3.47 times less return on investment than SEVEN+I HLDGS. But when comparing it to its historical volatility, Seven i Holdings is 4.57 times less risky than SEVEN+I HLDGS. It trades about 0.06 of its potential returns per unit of risk. SEVENI HLDGS UNSPADR12 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,057  in SEVENI HLDGS UNSPADR12 on September 14, 2024 and sell it today you would earn a total of  183.00  from holding SEVENI HLDGS UNSPADR12 or generate 17.31% return on investment over 90 days.

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

Seven i Holdings  vs.  SEVENI HLDGS UNSPADR12

Seven i Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Seven I reported solid returns over the last few months and may actually be approaching a breakup point.

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 Seven I and SEVEN+I HLDGS

The main advantage of trading using opposite Seven I and SEVEN+I HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven I 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 Seven i Holdings 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.