Correlation Between PureTech Health and Seche Environnement

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

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

Diversification Opportunities for PureTech Health and Seche Environnement

0.29

Correlation Coefficient

PureTech Health  Seche Environnement

Modest diversification

The 3 months correlation between PureTech and Seche is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Seche Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnement and PureTech Health 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 PureTech Health plc are associated (or correlated) with Seche Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnement has no effect on the direction of PureTech Health i.e., PureTech Health and Seche Environnement go up and down completely randomly.

Pair Corralation between PureTech Health and Seche Environnement

Assuming the 90 days trading horizon PureTech Health is expected to generate 5.85 times less return on investment than Seche Environnement. But when comparing it to its historical volatility, PureTech Health plc is 1.01 times less risky than Seche Environnement. It trades about 0.04 of its potential returns per unit of risk. Seche Environnement SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	96.88%
Values	Daily Returns

PureTech Health plc  vs.  Seche Environnement SA

PureTech Health plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with PureTech Health and Seche Environnement

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

The idea behind PureTech Health plc and Seche Environnement SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.