Correlation Between Sea and SPORTING
Can any of the company-specific risk be diversified away by investing in both Sea and SPORTING 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 SPORTING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Limited and SPORTING, you can compare the effects of market volatilities on Sea and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and SPORTING.
Diversification Opportunities for Sea and SPORTING
Very weak diversification
The 3 months correlation between Sea and SPORTING is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sea Limited and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 Limited are associated (or correlated) with SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Sea i.e., Sea and SPORTING go up and down completely randomly.
Pair Corralation between Sea and SPORTING
Assuming the 90 days horizon Sea Limited is expected to generate 4.87 times more return on investment than SPORTING. However, Sea is 4.87 times more volatile than SPORTING. It trades about 0.13 of its potential returns per unit of risk. SPORTING is currently generating about 0.21 per unit of risk. If you would invest 10,140 in Sea Limited on September 13, 2024 and sell it today you would earn a total of 520.00 from holding Sea Limited or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea Limited vs. SPORTING
Performance |
| Timeline |
| Sea Limited |
| SPORTING |
Sea and SPORTING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and SPORTING
The main advantage of trading using opposite Sea and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING's long position.| Sea vs. Wayside Technology Group | Sea vs. Carsales | Sea vs. Grupo Carso SAB | Sea vs. Sunny Optical Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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