Correlation Between Bendigo and SEVEN GROUP

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

By analyzing existing cross correlation between Bendigo And Adelaide and SEVEN GROUP HOLDINGS, you can compare the effects of market volatilities on Bendigo and SEVEN GROUP 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 Bendigo with a short position of SEVEN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bendigo and SEVEN GROUP.

Diversification Opportunities for Bendigo and SEVEN GROUP

0.84

Correlation Coefficient

Bendigo  SEVEN GROUP

Very poor diversification

The 3 months correlation between Bendigo and SEVEN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bendigo And Adelaide and SEVEN GROUP HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEVEN GROUP HOLDINGS and Bendigo 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 Bendigo And Adelaide are associated (or correlated) with SEVEN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEVEN GROUP HOLDINGS has no effect on the direction of Bendigo i.e., Bendigo and SEVEN GROUP go up and down completely randomly.

Pair Corralation between Bendigo and SEVEN GROUP

Assuming the 90 days trading horizon Bendigo is expected to generate 1.31 times less return on investment than SEVEN GROUP. But when comparing it to its historical volatility, Bendigo And Adelaide is 1.22 times less risky than SEVEN GROUP. It trades about 0.1 of its potential returns per unit of risk. SEVEN GROUP HOLDINGS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,728  in SEVEN GROUP HOLDINGS on September 22, 2024 and sell it today you would earn a total of  763.00  from holding SEVEN GROUP HOLDINGS or generate 20.47% return on investment over 90 days.

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

Bendigo And Adelaide  vs.  SEVEN GROUP HOLDINGS

Bendigo And Adelaide

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bendigo And Adelaide are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bendigo is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SEVEN GROUP HOLDINGS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEVEN GROUP HOLDINGS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SEVEN GROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bendigo and SEVEN GROUP

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

The idea behind Bendigo And Adelaide and SEVEN GROUP 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.