Correlation Between Made Tech and Seche Environnement

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

By analyzing existing cross correlation between Made Tech Group and Seche Environnement SA, you can compare the effects of market volatilities on Made Tech and Seche Environnement 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 Made Tech with a short position of Seche Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Made Tech and Seche Environnement.

Diversification Opportunities for Made Tech and Seche Environnement

0.73

Correlation Coefficient

Made Tech  Seche Environnement

Poor diversification

The 3 months correlation between Made and Seche is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group and Seche Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnement and Made Tech 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 Made Tech Group are associated (or correlated) with Seche Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnement has no effect on the direction of Made Tech i.e., Made Tech and Seche Environnement go up and down completely randomly.

Pair Corralation between Made Tech and Seche Environnement

Assuming the 90 days trading horizon Made Tech Group is expected to generate 1.25 times more return on investment than Seche Environnement. However, Made Tech is 1.25 times more volatile than Seche Environnement SA. It trades about 0.04 of its potential returns per unit of risk. Seche Environnement SA is currently generating about 0.04 per unit of risk. If you would invest  2,500  in Made Tech Group on December 23, 2024 and sell it today you would earn a total of  150.00  from holding Made Tech Group or generate 6.0% return on investment over 90 days.

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

Made Tech Group  vs.  Seche Environnement SA

Made Tech Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Made Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Seche Environnement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seche Environnement SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Made Tech and Seche Environnement

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

The idea behind Made Tech Group and Seche Environnement SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.