Correlation Between Sea and Portmeirion Group

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

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

Diversification Opportunities for Sea and Portmeirion Group

0.85

Correlation Coefficient

Sea  Portmeirion Group

Very poor diversification

The 3 months correlation between Sea and Portmeirion is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Portmeirion Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portmeirion Group PLC 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 Portmeirion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portmeirion Group PLC has no effect on the direction of Sea i.e., Sea and Portmeirion Group go up and down completely randomly.

Pair Corralation between Sea and Portmeirion Group

Allowing for the 90-day total investment horizon Sea is expected to generate 23.35 times more return on investment than Portmeirion Group. However, Sea is 23.35 times more volatile than Portmeirion Group PLC. It trades about 0.26 of its potential returns per unit of risk. Portmeirion Group PLC is currently generating about 0.17 per unit of risk. If you would invest  8,033  in Sea on September 17, 2024 and sell it today you would earn a total of  3,614  from holding Sea or generate 44.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Sea  vs.  Portmeirion Group PLC

Sea

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 20 (%) 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.

Portmeirion Group PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portmeirion Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Portmeirion Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sea and Portmeirion Group

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

The idea behind Sea and Portmeirion Group PLC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.