Correlation Between Sea and IHS Holding
Can any of the company-specific risk be diversified away by investing in both Sea and IHS Holding 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 IHS Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and IHS Holding, you can compare the effects of market volatilities on Sea and IHS Holding 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 IHS Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and IHS Holding.
Diversification Opportunities for Sea and IHS Holding
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sea and IHS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sea and IHS Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHS Holding 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 IHS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHS Holding has no effect on the direction of Sea i.e., Sea and IHS Holding go up and down completely randomly.
Pair Corralation between Sea and IHS Holding
Allowing for the 90-day total investment horizon Sea is expected to generate 0.95 times more return on investment than IHS Holding. However, Sea is 1.06 times less risky than IHS Holding. It trades about 0.29 of its potential returns per unit of risk. IHS Holding is currently generating about 0.13 per unit of risk. If you would invest 9,599 in Sea on August 30, 2024 and sell it today you would earn a total of 1,972 from holding Sea or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sea vs. IHS Holding
Performance |
| Timeline |
| Sea |
| IHS Holding |
Sea and IHS Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and IHS Holding
The main advantage of trading using opposite Sea and IHS Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, IHS Holding 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 IHS Holding will offset losses from the drop in IHS Holding's long position.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
| IHS Holding vs. Cogent Communications Group | IHS Holding vs. IDT Corporation | IHS Holding vs. Iridium Communications | IHS Holding vs. Cable One |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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