Correlation Between SEB SA and Imerys SA

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

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

Diversification Opportunities for SEB SA and Imerys SA

0.09

Correlation Coefficient

SEB SA  Imerys SA

Significant diversification

The 3 months correlation between SEB and Imerys is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Imerys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imerys SA and SEB 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 SEB SA are associated (or correlated) with Imerys SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imerys SA has no effect on the direction of SEB SA i.e., SEB SA and Imerys SA go up and down completely randomly.

Pair Corralation between SEB SA and Imerys SA

Assuming the 90 days horizon SEB SA is expected to generate 5.38 times less return on investment than Imerys SA. But when comparing it to its historical volatility, SEB SA is 1.35 times less risky than Imerys SA. It trades about 0.02 of its potential returns per unit of risk. Imerys SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,772  in Imerys SA on December 28, 2024 and sell it today you would earn a total of  408.00  from holding Imerys SA or generate 14.72% return on investment over 90 days.

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

SEB SA  vs.  Imerys SA

SEB SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEB SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEB SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Imerys SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imerys SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imerys SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEB SA and Imerys SA

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

The idea behind SEB SA and Imerys 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.

Check out your portfolio center.

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 Valuation module to check real value of public entities based on technical and fundamental data.