Correlation Between Ecofibre and SEVEN GROUP

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

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

Diversification Opportunities for Ecofibre and SEVEN GROUP

-0.37

Correlation Coefficient

Ecofibre  SEVEN GROUP

Very good diversification

The 3 months correlation between Ecofibre and SEVEN is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre 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 Ecofibre 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 Ecofibre 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 Ecofibre i.e., Ecofibre and SEVEN GROUP go up and down completely randomly.

Pair Corralation between Ecofibre and SEVEN GROUP

Assuming the 90 days trading horizon Ecofibre is expected to generate about the same return on investment as SEVEN GROUP HOLDINGS. However, Ecofibre is 5.82 times more volatile than SEVEN GROUP HOLDINGS. It trades about 0.02 of its potential returns per unit of risk. SEVEN GROUP HOLDINGS is currently producing about 0.1 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	99.24%
Values	Daily Returns

Ecofibre  vs.  SEVEN GROUP HOLDINGS

Ecofibre

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ecofibre are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Ecofibre may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Ecofibre and SEVEN GROUP

The main advantage of trading using opposite Ecofibre and SEVEN GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre 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 Ecofibre 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.