Correlation Between HomeToGo and Seven I

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

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

Diversification Opportunities for HomeToGo and Seven I

0.18

Correlation Coefficient

HomeToGo  Seven I

Average diversification

The 3 months correlation between HomeToGo and Seven is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE 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 HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and Seven I go up and down completely randomly.

Pair Corralation between HomeToGo and Seven I

Assuming the 90 days trading horizon HomeToGo is expected to generate 1.2 times less return on investment than Seven I. In addition to that, HomeToGo is 1.2 times more volatile than Seven i Holdings. It trades about 0.12 of its total potential returns per unit of risk. Seven i Holdings is currently generating about 0.17 per unit of volatility. If you would invest  1,294  in Seven i Holdings on September 5, 2024 and sell it today you would earn a total of  344.00  from holding Seven i Holdings or generate 26.58% return on investment over 90 days.

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

HomeToGo SE  vs.  Seven i Holdings

HomeToGo SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, HomeToGo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Seven i Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Seven I reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HomeToGo and Seven I

The main advantage of trading using opposite HomeToGo and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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 HomeToGo SE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.