Correlation Between Dai and Sei

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

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

Diversification Opportunities for Dai and Sei

0.0

Correlation Coefficient

Dai  Sei

Pay attention - limited upside

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

Pair Corralation between Dai and Sei

If you would invest  27.00  in Sei on September 3, 2024 and sell it today you would earn a total of  37.00  from holding Sei or generate 137.04% return on investment over 90 days.

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

Dai  vs.  Sei

Dai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dai has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Dai is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sei

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sei are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Sei exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dai and Sei

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

The idea behind Dai and Sei 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.