Correlation Between Sea and Better World
Can any of the company-specific risk be diversified away by investing in both Sea and Better World 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 Better World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Better World Acquisition, you can compare the effects of market volatilities on Sea and Better World 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 Better World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Better World.
Diversification Opportunities for Sea and Better World
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sea and Better is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Better World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better World Acquisition 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 Better World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better World Acquisition has no effect on the direction of Sea i.e., Sea and Better World go up and down completely randomly.
Pair Corralation between Sea and Better World
If you would invest 10,333 in Sea on September 15, 2024 and sell it today you would earn a total of 1,314 from holding Sea or generate 12.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Sea vs. Better World Acquisition
Performance |
| Timeline |
| Sea |
| Better World Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sea and Better World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Better World
The main advantage of trading using opposite Sea and Better World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Better World 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 Better World will offset losses from the drop in Better World's long position.The idea behind Sea and Better World Acquisition 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.| Better World vs. Griffon | Better World vs. RBC Bearings Incorporated | Better World vs. Highway Holdings Limited | Better World vs. Tencent Music 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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