Correlation Between Seche Environnement and SmartSet Automation

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

Diversification Opportunities for Seche Environnement and SmartSet Automation

-0.6

Correlation Coefficient

Seche Environnement  SmartSet Automation

Excellent diversification

The 3 months correlation between Seche and SmartSet is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnement SA and SmartSet Automation LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartSet Automation LLC 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 SmartSet Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartSet Automation LLC has no effect on the direction of Seche Environnement i.e., Seche Environnement and SmartSet Automation go up and down completely randomly.

Pair Corralation between Seche Environnement and SmartSet Automation

Assuming the 90 days horizon Seche Environnement is expected to generate 1.8 times less return on investment than SmartSet Automation. But when comparing it to its historical volatility, Seche Environnement SA is 4.22 times less risky than SmartSet Automation. It trades about 0.13 of its potential returns per unit of risk. SmartSet Automation LLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.25  in SmartSet Automation LLC on May 2, 2025 and sell it today you would lose (0.05) from holding SmartSet Automation LLC or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Seche Environnement SA  vs.  SmartSet Automation LLC

Seche Environnement

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seche Environnement SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Seche Environnement showed solid returns over the last few months and may actually be approaching a breakup point.

SmartSet Automation LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SmartSet Automation LLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SmartSet Automation exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seche Environnement and SmartSet Automation

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

The idea behind Seche Environnement SA and SmartSet Automation LLC 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.

Check out your portfolio center.

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.