Correlation Between Seche Environnement and China Everbright

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

By analyzing existing cross correlation between Seche Environnement SA and China Everbright Water, you can compare the effects of market volatilities on Seche Environnement and China Everbright 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 Seche Environnement with a short position of China Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seche Environnement and China Everbright.

Diversification Opportunities for Seche Environnement and China Everbright

0.0

Correlation Coefficient

Seche Environnement  China Everbright

Pay attention - limited upside

The 3 months correlation between Seche and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and China Everbright Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Water and Seche Environnement 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 Seche Environnement SA are associated (or correlated) with China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Water has no effect on the direction of Seche Environnement i.e., Seche Environnement and China Everbright go up and down completely randomly.

Pair Corralation between Seche Environnement and China Everbright

If you would invest  2,494  in Seche Environnement SA on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Seche Environnement SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Seche Environnement SA  vs.  China Everbright Water

Seche Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seche Environnement SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Seche Environnement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

China Everbright Water

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Seche Environnement and China Everbright

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

The idea behind Seche Environnement SA and China Everbright Water 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.