Correlation Between ARISTOCRAT LEISURE and SEEK

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

By analyzing existing cross correlation between ARISTOCRAT LEISURE and SEEK Limited, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and SEEK 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 ARISTOCRAT LEISURE with a short position of SEEK. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and SEEK.

Diversification Opportunities for ARISTOCRAT LEISURE and SEEK

0.0

Correlation Coefficient

ARISTOCRAT LEISURE  SEEK

Pay attention - limited upside

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

Pair Corralation between ARISTOCRAT LEISURE and SEEK

Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 2.38 times less return on investment than SEEK. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 1.25 times less risky than SEEK. It trades about 0.04 of its potential returns per unit of risk. SEEK Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,260  in SEEK Limited on May 13, 2025 and sell it today you would earn a total of  90.00  from holding SEEK Limited or generate 7.14% return on investment over 90 days.

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

ARISTOCRAT LEISURE  vs.  SEEK Limited

ARISTOCRAT LEISURE

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ARISTOCRAT LEISURE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ARISTOCRAT LEISURE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SEEK Limited

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in SEEK Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SEEK may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ARISTOCRAT LEISURE and SEEK

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

The idea behind ARISTOCRAT LEISURE and SEEK Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.