Correlation Between Sea and Lionsgate Studios

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

By analyzing existing cross correlation between Sea and Lionsgate Studios Corp, you can compare the effects of market volatilities on Sea and Lionsgate Studios 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 Lionsgate Studios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Lionsgate Studios.

Diversification Opportunities for Sea and Lionsgate Studios

0.37

Correlation Coefficient

Sea  Lionsgate Studios

Weak diversification

The 3 months correlation between Sea and Lionsgate is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp 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 are associated (or correlated) with Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of Sea i.e., Sea and Lionsgate Studios go up and down completely randomly.

Pair Corralation between Sea and Lionsgate Studios

Allowing for the 90-day total investment horizon Sea is expected to generate 1.16 times more return on investment than Lionsgate Studios. However, Sea is 1.16 times more volatile than Lionsgate Studios Corp. It trades about 0.11 of its potential returns per unit of risk. Lionsgate Studios Corp is currently generating about 0.02 per unit of risk. If you would invest  9,428  in Sea on September 28, 2024 and sell it today you would earn a total of  1,537  from holding Sea or generate 16.3% return on investment over 90 days.

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

Sea  vs.  Lionsgate Studios Corp

Sea

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lionsgate Studios Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Lionsgate Studios is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sea and Lionsgate Studios

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

The idea behind Sea and Lionsgate Studios Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.