Correlation Between Seche Environnement and Primary Health

Can any of the company-specific risk be diversified away by investing in both Seche Environnement and Primary Health 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 Primary Health 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 Primary Health Properties, you can compare the effects of market volatilities on Seche Environnement and Primary Health 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 Primary Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seche Environnement and Primary Health.

Diversification Opportunities for Seche Environnement and Primary Health

0.6

Correlation Coefficient

Seche Environnement  Primary Health

Poor diversification

The 3 months correlation between Seche and Primary is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and Primary Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primary Health Properties 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 Primary Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primary Health Properties has no effect on the direction of Seche Environnement i.e., Seche Environnement and Primary Health go up and down completely randomly.

Pair Corralation between Seche Environnement and Primary Health

Assuming the 90 days trading horizon Seche Environnement SA is expected to generate 2.24 times more return on investment than Primary Health. However, Seche Environnement is 2.24 times more volatile than Primary Health Properties. It trades about -0.03 of its potential returns per unit of risk. Primary Health Properties is currently generating about -0.1 per unit of risk. If you would invest  8,199  in Seche Environnement SA on October 25, 2024 and sell it today you would lose (509.00) from holding Seche Environnement SA or give up 6.21% of portfolio value over 90 days.

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

Seche Environnement SA  vs.  Primary Health Properties

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Primary Health Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primary Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Seche Environnement and Primary Health

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

The idea behind Seche Environnement SA and Primary Health Properties 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..