Correlation Between Superior Plus and Sea
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Sea 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 Superior Plus and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Sea Limited, you can compare the effects of market volatilities on Superior Plus and Sea 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 Superior Plus with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Sea.
Diversification Opportunities for Superior Plus and Sea
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Sea is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Limited has no effect on the direction of Superior Plus i.e., Superior Plus and Sea go up and down completely randomly.
Pair Corralation between Superior Plus and Sea
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Sea. In addition to that, Superior Plus is 1.53 times more volatile than Sea Limited. It trades about -0.01 of its total potential returns per unit of risk. Sea Limited is currently generating about 0.25 per unit of volatility. If you would invest 9,140 in Sea Limited on August 29, 2024 and sell it today you would earn a total of 1,660 from holding Sea Limited or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Superior Plus Corp vs. Sea Limited
Performance |
| Timeline |
| Superior Plus Corp |
| Sea Limited |
Superior Plus and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Sea
The main advantage of trading using opposite Superior Plus and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Superior Plus vs. Meli Hotels International | Superior Plus vs. InterContinental Hotels Group | Superior Plus vs. PT Bank Maybank | Superior Plus vs. Pebblebrook Hotel Trust |
| Sea vs. Live Nation Entertainment | Sea vs. United Breweries Co | Sea vs. Fevertree Drinks PLC | Sea vs. Universal Entertainment |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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