Correlation Between Sea and REMEDY ENTERTAINMENT

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

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

Diversification Opportunities for Sea and REMEDY ENTERTAINMENT

-0.77

Correlation Coefficient

Sea  REMEDY ENTERTAINMENT

Pay attention - limited upside

The 3 months correlation between Sea and REMEDY is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sea Limited and REMEDY ENTERTAINMENT OYJ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REMEDY ENTERTAINMENT OYJ and Sea 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 Sea Limited are associated (or correlated) with REMEDY ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REMEDY ENTERTAINMENT OYJ has no effect on the direction of Sea i.e., Sea and REMEDY ENTERTAINMENT go up and down completely randomly.

Pair Corralation between Sea and REMEDY ENTERTAINMENT

Assuming the 90 days horizon Sea is expected to generate 1.04 times less return on investment than REMEDY ENTERTAINMENT. But when comparing it to its historical volatility, Sea Limited is 1.29 times less risky than REMEDY ENTERTAINMENT. It trades about 0.13 of its potential returns per unit of risk. REMEDY ENTERTAINMENT OYJ is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,342  in REMEDY ENTERTAINMENT OYJ on September 13, 2024 and sell it today you would earn a total of  68.00  from holding REMEDY ENTERTAINMENT OYJ or generate 5.07% return on investment over 90 days.

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

Sea Limited  vs.  REMEDY ENTERTAINMENT OYJ

Sea Limited

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sea reported solid returns over the last few months and may actually be approaching a breakup point.

REMEDY ENTERTAINMENT OYJ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REMEDY ENTERTAINMENT OYJ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sea and REMEDY ENTERTAINMENT

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

The idea behind Sea Limited and REMEDY ENTERTAINMENT OYJ 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..