Correlation Between Cardinal Health and Sea
Can any of the company-specific risk be diversified away by investing in both Cardinal Health 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 Cardinal Health and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Sea, you can compare the effects of market volatilities on Cardinal Health 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 Cardinal Health with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Sea.
Diversification Opportunities for Cardinal Health and Sea
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cardinal and Sea is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and Cardinal Health 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 Cardinal Health 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 has no effect on the direction of Cardinal Health i.e., Cardinal Health and Sea go up and down completely randomly.
Pair Corralation between Cardinal Health and Sea
Considering the 90-day investment horizon Cardinal Health is expected to generate 1.34 times less return on investment than Sea. But when comparing it to its historical volatility, Cardinal Health is 2.52 times less risky than Sea. It trades about 0.09 of its potential returns per unit of risk. Sea is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,600 in Sea on August 26, 2024 and sell it today you would earn a total of 3,704 from holding Sea or generate 48.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Sea
Performance |
| Timeline |
| Cardinal Health |
| Sea |
Cardinal Health and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Sea
The main advantage of trading using opposite Cardinal Health and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health 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.The idea behind Cardinal Health and Sea 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.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |