Correlation Between ATRenew and Sea
Can any of the company-specific risk be diversified away by investing in both ATRenew 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 ATRenew and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATRenew Inc DRC and Sea, you can compare the effects of market volatilities on ATRenew 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 ATRenew with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRenew and Sea.
Diversification Opportunities for ATRenew and Sea
Very weak diversification
The 3 months correlation between ATRenew and Sea is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and ATRenew 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 ATRenew Inc DRC 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 ATRenew i.e., ATRenew and Sea go up and down completely randomly.
Pair Corralation between ATRenew and Sea
Given the investment horizon of 90 days ATRenew is expected to generate 1.29 times less return on investment than Sea. In addition to that, ATRenew is 1.32 times more volatile than Sea. It trades about 0.03 of its total potential returns per unit of risk. Sea is currently generating about 0.06 per unit of volatility. If you would invest 5,810 in Sea on August 28, 2024 and sell it today you would earn a total of 5,590 from holding Sea or generate 96.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATRenew Inc DRC vs. Sea
Performance |
| Timeline |
| ATRenew Inc DRC |
| Sea |
ATRenew and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATRenew and Sea
The main advantage of trading using opposite ATRenew and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRenew 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 ATRenew Inc DRC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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