Correlation Between Sea and AMC Networks
Can any of the company-specific risk be diversified away by investing in both Sea and AMC Networks 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 AMC Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and AMC Networks, you can compare the effects of market volatilities on Sea and AMC Networks 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 AMC Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and AMC Networks.
Diversification Opportunities for Sea and AMC Networks
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sea and AMC is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sea and AMC Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Networks 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 AMC Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Networks has no effect on the direction of Sea i.e., Sea and AMC Networks go up and down completely randomly.
Pair Corralation between Sea and AMC Networks
Allowing for the 90-day total investment horizon Sea is expected to generate 1.37 times less return on investment than AMC Networks. But when comparing it to its historical volatility, Sea is 1.19 times less risky than AMC Networks. It trades about 0.24 of its potential returns per unit of risk. AMC Networks is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 792.00 in AMC Networks on August 24, 2024 and sell it today you would earn a total of 190.00 from holding AMC Networks or generate 23.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. AMC Networks
Performance |
| Timeline |
| Sea |
| AMC Networks |
Sea and AMC Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and AMC Networks
The main advantage of trading using opposite Sea and AMC Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, AMC Networks 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 AMC Networks will offset losses from the drop in AMC Networks' long position.The idea behind Sea and AMC Networks 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.| AMC Networks vs. Nexstar Broadcasting Group | AMC Networks vs. News Corp B | AMC Networks vs. Fox Corp Class | AMC Networks vs. Liberty Media |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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