Correlation Between Seven West and TRADEGATE

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

Diversification Opportunities for Seven West and TRADEGATE

-0.15

Correlation Coefficient

Seven West  TRADEGATE

Good diversification

The 3 months correlation between Seven and TRADEGATE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and TRADEGATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEGATE 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 TRADEGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEGATE has no effect on the direction of Seven West i.e., Seven West and TRADEGATE go up and down completely randomly.

Pair Corralation between Seven West and TRADEGATE

Assuming the 90 days horizon Seven West Media is expected to generate 26.58 times more return on investment than TRADEGATE. However, Seven West is 26.58 times more volatile than TRADEGATE. It trades about 0.02 of its potential returns per unit of risk. TRADEGATE is currently generating about 0.05 per unit of risk. If you would invest  9.15  in Seven West Media on October 22, 2024 and sell it today you would lose (0.20) from holding Seven West Media or give up 2.19% of portfolio value over 90 days.

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

Seven West Media  vs.  TRADEGATE

Seven West Media

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seven West Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Seven West is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

TRADEGATE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRADEGATE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Seven West and TRADEGATE

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

The idea behind Seven West Media and TRADEGATE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.