Correlation Between TESCO PLC and Seven I

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

By analyzing existing cross correlation between TESCO PLC LS 0633333 and Seven i Holdings, you can compare the effects of market volatilities on TESCO PLC and Seven I 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 TESCO PLC with a short position of Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of TESCO PLC and Seven I.

Diversification Opportunities for TESCO PLC and Seven I

0.46

Correlation Coefficient

TESCO PLC  Seven I

Very weak diversification

The 3 months correlation between TESCO and Seven is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TESCO PLC LS 0633333 and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings and TESCO PLC 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 TESCO PLC LS 0633333 are associated (or correlated) with Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of TESCO PLC i.e., TESCO PLC and Seven I go up and down completely randomly.

Pair Corralation between TESCO PLC and Seven I

Assuming the 90 days trading horizon TESCO PLC is expected to generate 3.21 times less return on investment than Seven I. But when comparing it to its historical volatility, TESCO PLC LS 0633333 is 1.74 times less risky than Seven I. It trades about 0.05 of its potential returns per unit of risk. Seven i Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,343  in Seven i Holdings on September 29, 2024 and sell it today you would earn a total of  170.00  from holding Seven i Holdings or generate 12.66% return on investment over 90 days.

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

TESCO PLC LS 0633333  vs.  Seven i Holdings

TESCO PLC LS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TESCO PLC LS 0633333 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TESCO PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Seven i Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 7 (%) 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.

Pair Trading with TESCO PLC and Seven I

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

The idea behind TESCO PLC LS 0633333 and Seven i Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.