Correlation Between SEVEN GROUP and Metals X

Can any of the company-specific risk be diversified away by investing in both SEVEN GROUP and Metals X 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 Metals X 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 Metals X, you can compare the effects of market volatilities on SEVEN GROUP and Metals X 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 Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEVEN GROUP and Metals X.

Diversification Opportunities for SEVEN GROUP and Metals X

-0.7

Correlation Coefficient

SEVEN GROUP  Metals X

Excellent diversification

The 3 months correlation between SEVEN and Metals is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SEVEN GROUP HOLDINGS and Metals X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X 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 Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X has no effect on the direction of SEVEN GROUP i.e., SEVEN GROUP and Metals X go up and down completely randomly.

Pair Corralation between SEVEN GROUP and Metals X

Assuming the 90 days trading horizon SEVEN GROUP HOLDINGS is expected to generate 0.41 times more return on investment than Metals X. However, SEVEN GROUP HOLDINGS is 2.41 times less risky than Metals X. It trades about 0.11 of its potential returns per unit of risk. Metals X is currently generating about 0.02 per unit of risk. If you would invest  2,188  in SEVEN GROUP HOLDINGS on October 4, 2024 and sell it today you would earn a total of  2,423  from holding SEVEN GROUP HOLDINGS or generate 110.74% return on investment over 90 days.

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

SEVEN GROUP HOLDINGS  vs.  Metals X

SEVEN GROUP HOLDINGS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEVEN GROUP HOLDINGS are ranked lower than 7 (%) 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.

Metals X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metals X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metals X is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SEVEN GROUP and Metals X

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

The idea behind SEVEN GROUP HOLDINGS and Metals X 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.