Correlation Between Seven Principles and Seven I

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

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

Diversification Opportunities for Seven Principles and Seven I

0.66

Correlation Coefficient

Seven Principles  Seven I

Poor diversification

The 3 months correlation between Seven and Seven is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Seven Principles AG and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings and Seven Principles 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 Principles AG are associated (or correlated) with Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Seven Principles i.e., Seven Principles and Seven I go up and down completely randomly.

Pair Corralation between Seven Principles and Seven I

Assuming the 90 days trading horizon Seven Principles AG is expected to generate 0.79 times more return on investment than Seven I. However, Seven Principles AG is 1.27 times less risky than Seven I. It trades about -0.03 of its potential returns per unit of risk. Seven i Holdings is currently generating about -0.06 per unit of risk. If you would invest  515.00  in Seven Principles AG on December 22, 2024 and sell it today you would lose (25.00) from holding Seven Principles AG or give up 4.85% of portfolio value over 90 days.

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

Seven Principles AG  vs.  Seven i Holdings

Seven Principles

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seven Principles AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Seven Principles is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Seven i Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seven i Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Seven Principles and Seven I

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

The idea behind Seven Principles AG and Seven i Holdings 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.