Correlation Between SENECA FOODS-A and VERBUND AG

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Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and VERBUND AG 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 SENECA FOODS-A and VERBUND AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and VERBUND AG, you can compare the effects of market volatilities on SENECA FOODS-A and VERBUND AG 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 SENECA FOODS-A with a short position of VERBUND AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and VERBUND AG.

Diversification Opportunities for SENECA FOODS-A and VERBUND AG

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between SENECA and VERBUND is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and VERBUND AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG and SENECA FOODS-A 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 SENECA FOODS A are associated (or correlated) with VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and VERBUND AG go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and VERBUND AG

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.69 times more return on investment than VERBUND AG. However, SENECA FOODS-A is 1.69 times more volatile than VERBUND AG. It trades about 0.15 of its potential returns per unit of risk. VERBUND AG is currently generating about 0.01 per unit of risk. If you would invest  5,250  in SENECA FOODS A on September 5, 2024 and sell it today you would earn a total of  1,450  from holding SENECA FOODS A or generate 27.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SENECA FOODS A  vs.  VERBUND AG

 Performance 
       Timeline  
SENECA FOODS A 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.
VERBUND AG 

Risk-Adjusted Performance

1 of 100

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

SENECA FOODS-A and VERBUND AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SENECA FOODS-A and VERBUND AG

The main advantage of trading using opposite SENECA FOODS-A and VERBUND AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, VERBUND AG 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 VERBUND AG will offset losses from the drop in VERBUND AG's long position.
The idea behind SENECA FOODS A and VERBUND 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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