Correlation Between SES SA and News

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

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

Diversification Opportunities for SES SA and News

0.71

Correlation Coefficient

SES SA  News

Poor diversification

The 3 months correlation between SES and News is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SES SA and News Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News and SES SA 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 SES SA are associated (or correlated) with News. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News has no effect on the direction of SES SA i.e., SES SA and News go up and down completely randomly.

Pair Corralation between SES SA and News

Assuming the 90 days horizon SES SA is expected to generate 1.8 times more return on investment than News. However, SES SA is 1.8 times more volatile than News Corporation. It trades about 0.37 of its potential returns per unit of risk. News Corporation is currently generating about 0.04 per unit of risk. If you would invest  314.00  in SES SA on December 2, 2024 and sell it today you would earn a total of  119.00  from holding SES SA or generate 37.9% return on investment over 90 days.

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

SES SA  vs.  News Corp.

SES SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SES SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SES SA reported solid returns over the last few months and may actually be approaching a breakup point.

News

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in News Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, News is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SES SA and News

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

The idea behind SES SA and News Corporation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.