Correlation Between Seche Environnement and Foresight Environmental

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

Diversification Opportunities for Seche Environnement and Foresight Environmental

0.8

Correlation Coefficient

Seche Environnement  Foresight Environmental

Very poor diversification

The 3 months correlation between Seche and Foresight is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental 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 Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Seche Environnement i.e., Seche Environnement and Foresight Environmental go up and down completely randomly.

Pair Corralation between Seche Environnement and Foresight Environmental

Assuming the 90 days trading horizon Seche Environnement SA is expected to generate 1.86 times more return on investment than Foresight Environmental. However, Seche Environnement is 1.86 times more volatile than Foresight Environmental Infrastructure. It trades about 0.21 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about 0.16 per unit of risk. If you would invest  7,780  in Seche Environnement SA on April 20, 2025 and sell it today you would earn a total of  2,480  from holding Seche Environnement SA or generate 31.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.88%
Values	Daily Returns

Seche Environnement SA  vs.  Foresight Environmental Infras

Seche Environnement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seche Environnement SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Seche Environnement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Foresight Environmental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foresight Environmental Infrastructure are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Foresight Environmental may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Seche Environnement and Foresight Environmental

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

The idea behind Seche Environnement SA and Foresight Environmental Infrastructure 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.