Correlation Between Sea and News Corp

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

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

Diversification Opportunities for Sea and News Corp

0.79

Correlation Coefficient

Sea  News Corp

Poor diversification

The 3 months correlation between Sea and News is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sea and News Corp B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp B 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp B has no effect on the direction of Sea i.e., Sea and News Corp go up and down completely randomly.

Pair Corralation between Sea and News Corp

Allowing for the 90-day total investment horizon Sea is expected to generate 2.05 times more return on investment than News Corp. However, Sea is 2.05 times more volatile than News Corp B. It trades about -0.05 of its potential returns per unit of risk. News Corp B is currently generating about -0.14 per unit of risk. If you would invest  11,400  in Sea on September 25, 2024 and sell it today you would lose (253.00) from holding Sea or give up 2.22% of portfolio value over 90 days.

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

Sea  vs.  News Corp B

Sea

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 10 (%) 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.

News Corp B

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, News Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sea and News Corp

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

The idea behind Sea and News Corp B 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.