Correlation Between SES SA and E W

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

By analyzing existing cross correlation between SES SA and E W Scripps, you can compare the effects of market volatilities on SES SA and E W 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 E W. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES SA and E W.

Diversification Opportunities for SES SA and E W

0.26

Correlation Coefficient

SES SA  E W

Modest diversification

The 3 months correlation between SES and SSP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SES SA and E W Scripps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E W Scripps 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 E W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E W Scripps has no effect on the direction of SES SA i.e., SES SA and E W go up and down completely randomly.

Pair Corralation between SES SA and E W

Assuming the 90 days horizon SES SA is expected to generate 0.66 times more return on investment than E W. However, SES SA is 1.52 times less risky than E W. It trades about 0.23 of its potential returns per unit of risk. E W Scripps is currently generating about 0.12 per unit of risk. If you would invest  300.00  in SES SA on December 26, 2024 and sell it today you would earn a total of  282.00  from holding SES SA or generate 94.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

SES SA  vs.  E W Scripps

SES SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SES SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SES SA reported solid returns over the last few months and may actually be approaching a breakup point.

E W Scripps

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E W Scripps are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, E W reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SES SA and E W

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

The idea behind SES SA and E W Scripps 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.