Correlation Between TESCO PLC and Seven I

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

By analyzing existing cross correlation between TESCO PLC ADR1 and Seven i Holdings, you can compare the effects of market volatilities on TESCO PLC 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 TESCO PLC with a short position of Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of TESCO PLC and Seven I.

Diversification Opportunities for TESCO PLC and Seven I

0.23

Correlation Coefficient

TESCO PLC  Seven I

Modest diversification

The 3 months correlation between TESCO and Seven is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding TESCO PLC ADR1 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 TESCO PLC 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 TESCO PLC ADR1 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 TESCO PLC i.e., TESCO PLC and Seven I go up and down completely randomly.

Pair Corralation between TESCO PLC and Seven I

Assuming the 90 days trading horizon TESCO PLC ADR1 is expected to under-perform the Seven I. In addition to that, TESCO PLC is 1.04 times more volatile than Seven i Holdings. It trades about -0.09 of its total potential returns per unit of risk. Seven i Holdings is currently generating about -0.06 per unit of volatility. If you would invest  1,500  in Seven i Holdings on December 25, 2024 and sell it today you would lose (149.00) from holding Seven i Holdings or give up 9.93% of portfolio value over 90 days.

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

TESCO PLC ADR1  vs.  Seven i Holdings

TESCO PLC ADR1

Risk-Adjusted Performance

Very Weak

Over the last 90 days TESCO PLC ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company 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 weak 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 TESCO PLC and Seven I

The main advantage of trading using opposite TESCO PLC and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TESCO PLC 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 TESCO PLC ADR1 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.