Correlation Between Seven I and Village Super

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

By analyzing existing cross correlation between Seven i Holdings and Village Super Market, you can compare the effects of market volatilities on Seven I and Village Super 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 Seven I with a short position of Village Super. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven I and Village Super.

Diversification Opportunities for Seven I and Village Super

0.27

Correlation Coefficient

Seven I  Village Super

Modest diversification

The 3 months correlation between Seven and Village is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market and Seven I 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 Seven i Holdings are associated (or correlated) with Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of Seven I i.e., Seven I and Village Super go up and down completely randomly.

Pair Corralation between Seven I and Village Super

Assuming the 90 days horizon Seven i Holdings is expected to generate 2.2 times more return on investment than Village Super. However, Seven I is 2.2 times more volatile than Village Super Market. It trades about 0.22 of its potential returns per unit of risk. Village Super Market is currently generating about -0.07 per unit of risk. If you would invest  1,426  in Seven i Holdings on September 13, 2024 and sell it today you would earn a total of  254.00  from holding Seven i Holdings or generate 17.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Seven i Holdings  vs.  Village Super Market

Seven i Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Seven I showed solid returns over the last few months and may actually be approaching a breakup point.

Village Super Market

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Village Super Market has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Village Super is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seven I and Village Super

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

The idea behind Seven i Holdings and Village Super Market 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.