Correlation Between Seven West and Data Modul

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

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

Diversification Opportunities for Seven West and Data Modul

0.31

Correlation Coefficient

Seven West  Data Modul

Weak diversification

The 3 months correlation between Seven and Data is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Data Modul AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Modul AG and Seven West 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 West Media are associated (or correlated) with Data Modul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Modul AG has no effect on the direction of Seven West i.e., Seven West and Data Modul go up and down completely randomly.

Pair Corralation between Seven West and Data Modul

Assuming the 90 days horizon Seven West Media is expected to under-perform the Data Modul. In addition to that, Seven West is 2.04 times more volatile than Data Modul AG. It trades about -0.03 of its total potential returns per unit of risk. Data Modul AG is currently generating about -0.06 per unit of volatility. If you would invest  5,273  in Data Modul AG on October 23, 2024 and sell it today you would lose (2,693) from holding Data Modul AG or give up 51.07% of portfolio value over 90 days.

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

Seven West Media  vs.  Data Modul AG

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Data Modul AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Seven West and Data Modul

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

The idea behind Seven West Media and Data Modul AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.