Correlation Between Kroger and Seven I

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

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

Diversification Opportunities for Kroger and Seven I

-0.41

Correlation Coefficient

Kroger  Seven I

Very good diversification

The 3 months correlation between Kroger and Seven is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company 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 Kroger 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 Kroger Company 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 Kroger i.e., Kroger and Seven I go up and down completely randomly.

Pair Corralation between Kroger and Seven I

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.67 times more return on investment than Seven I. However, Kroger Company is 1.5 times less risky than Seven I. It trades about 0.05 of its potential returns per unit of risk. Seven i Holdings is currently generating about -0.04 per unit of risk. If you would invest  6,204  in Kroger Company on December 27, 2024 and sell it today you would earn a total of  230.00  from holding Kroger Company or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kroger Company  vs.  Seven i Holdings

Kroger Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kroger is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Seven i Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seven i Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Seven I is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Seven I

The main advantage of trading using opposite Kroger and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger 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 Kroger Company 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.