Correlation Between SEVENI HLDGS and Woolworths Group

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

By analyzing existing cross correlation between SEVENI HLDGS UNSPADR12 and Woolworths Group Limited, you can compare the effects of market volatilities on SEVENI HLDGS and Woolworths 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 SEVENI HLDGS with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEVENI HLDGS and Woolworths Group.

Diversification Opportunities for SEVENI HLDGS and Woolworths Group

0.5

Correlation Coefficient

SEVENI HLDGS  Woolworths Group

Very weak diversification

The 3 months correlation between SEVENI and Woolworths is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SEVENI HLDGS UNSPADR12 and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and SEVENI HLDGS 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 SEVENI HLDGS UNSPADR12 are associated (or correlated) with Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of SEVENI HLDGS i.e., SEVENI HLDGS and Woolworths Group go up and down completely randomly.

Pair Corralation between SEVENI HLDGS and Woolworths Group

Assuming the 90 days trading horizon SEVENI HLDGS UNSPADR12 is expected to generate 1.73 times more return on investment than Woolworths Group. However, SEVENI HLDGS is 1.73 times more volatile than Woolworths Group Limited. It trades about 0.03 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.05 per unit of risk. If you would invest  1,240  in SEVENI HLDGS UNSPADR12 on December 28, 2024 and sell it today you would earn a total of  40.00  from holding SEVENI HLDGS UNSPADR12 or generate 3.23% return on investment over 90 days.

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

SEVENI HLDGS UNSPADR12  vs.  Woolworths Group Limited

SEVENI HLDGS UNSPADR12

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEVENI HLDGS UNSPADR12 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, SEVENI HLDGS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Woolworths Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Woolworths Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Woolworths Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SEVENI HLDGS and Woolworths Group

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

The idea behind SEVENI HLDGS UNSPADR12 and Woolworths Group Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.