Correlation Between Sabre Insurance and Seche Environnement

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

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

Diversification Opportunities for Sabre Insurance and Seche Environnement

-0.2

Correlation Coefficient

Sabre Insurance  Seche Environnement

Good diversification

The 3 months correlation between Sabre and Seche is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance 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 Sabre Insurance 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 Sabre Insurance 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 Sabre Insurance i.e., Sabre Insurance and Seche Environnement go up and down completely randomly.

Pair Corralation between Sabre Insurance and Seche Environnement

Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Seche Environnement. But the stock apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 1.74 times less risky than Seche Environnement. The stock trades about -0.09 of its potential returns per unit of risk. The Seche Environnement SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,680  in Seche Environnement SA on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Seche Environnement SA or generate 0.13% return on investment over 90 days.

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

Sabre Insurance Group  vs.  Seche Environnement SA

Sabre Insurance Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 1 (%) 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 Sabre Insurance and Seche Environnement

The main advantage of trading using opposite Sabre Insurance and Seche Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance 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 Sabre Insurance 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.