Correlation Between Sea and 191216DQ0

Can any of the company-specific risk be diversified away by investing in both Sea and 191216DQ0 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 191216DQ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sea and COCA COLA CO, you can compare the effects of market volatilities on Sea and 191216DQ0 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 191216DQ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and 191216DQ0.

Diversification Opportunities for Sea and 191216DQ0

-0.18

Correlation Coefficient

Sea  191216DQ0

Good diversification

The 3 months correlation between Sea and 191216DQ0 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sea and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216DQ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Sea i.e., Sea and 191216DQ0 go up and down completely randomly.

Pair Corralation between Sea and 191216DQ0

Allowing for the 90-day total investment horizon Sea is expected to under-perform the 191216DQ0. In addition to that, Sea is 1.33 times more volatile than COCA COLA CO. It trades about -0.11 of its total potential returns per unit of risk. COCA COLA CO is currently generating about -0.08 per unit of volatility. If you would invest  7,519  in COCA COLA CO on September 26, 2024 and sell it today you would lose (172.00) from holding COCA COLA CO or give up 2.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Sea  vs.  COCA COLA CO

Sea

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 8 (%) 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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for COCA COLA CO investors.

Pair Trading with Sea and 191216DQ0

The main advantage of trading using opposite Sea and 191216DQ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, 191216DQ0 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 191216DQ0 will offset losses from the drop in 191216DQ0's long position.

The idea behind Sea and COCA COLA CO 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.