Correlation Between Seche Environnement and Global Net

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

By analyzing existing cross correlation between Seche Environnement SA and Global Net Lease, you can compare the effects of market volatilities on Seche Environnement and Global Net 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 Seche Environnement with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seche Environnement and Global Net.

Diversification Opportunities for Seche Environnement and Global Net

0.51

Correlation Coefficient

Seche Environnement  Global Net

Very weak diversification

The 3 months correlation between Seche and Global is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Seche Environnement 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 Seche Environnement SA are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Seche Environnement i.e., Seche Environnement and Global Net go up and down completely randomly.

Pair Corralation between Seche Environnement and Global Net

Assuming the 90 days trading horizon Seche Environnement SA is expected to generate 1.17 times more return on investment than Global Net. However, Seche Environnement is 1.17 times more volatile than Global Net Lease. It trades about -0.03 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.04 per unit of risk. If you would invest  8,310  in Seche Environnement SA on October 26, 2024 and sell it today you would lose (500.00) from holding Seche Environnement SA or give up 6.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Seche Environnement SA  vs.  Global Net Lease

Seche Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seche Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Seche Environnement is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global Net is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Seche Environnement and Global Net

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

The idea behind Seche Environnement SA and Global Net Lease 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.