Correlation Between SEVEN GROUP and Hansen Technologies

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

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

Diversification Opportunities for SEVEN GROUP and Hansen Technologies

0.87

Correlation Coefficient

SEVEN GROUP  Hansen Technologies

Very poor diversification

The 3 months correlation between SEVEN and Hansen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SEVEN GROUP HOLDINGS and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and SEVEN GROUP 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 GROUP HOLDINGS are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of SEVEN GROUP i.e., SEVEN GROUP and Hansen Technologies go up and down completely randomly.

Pair Corralation between SEVEN GROUP and Hansen Technologies

Assuming the 90 days trading horizon SEVEN GROUP HOLDINGS is expected to generate 0.86 times more return on investment than Hansen Technologies. However, SEVEN GROUP HOLDINGS is 1.16 times less risky than Hansen Technologies. It trades about -0.13 of its potential returns per unit of risk. Hansen Technologies is currently generating about -0.14 per unit of risk. If you would invest  4,863  in SEVEN GROUP HOLDINGS on October 9, 2024 and sell it today you would lose (155.00) from holding SEVEN GROUP HOLDINGS or give up 3.19% of portfolio value over 90 days.

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

SEVEN GROUP HOLDINGS  vs.  Hansen Technologies

SEVEN GROUP HOLDINGS

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEVEN GROUP HOLDINGS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEVEN GROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hansen Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hansen Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansen Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEVEN GROUP and Hansen Technologies

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

The idea behind SEVEN GROUP HOLDINGS and Hansen Technologies 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.