Correlation Between Sea and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Sea and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and BBB Foods, you can compare the effects of market volatilities on Sea and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and BBB Foods.
Diversification Opportunities for Sea and BBB Foods
Poor diversification
The 3 months correlation between Sea and BBB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sea and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Sea i.e., Sea and BBB Foods go up and down completely randomly.
Pair Corralation between Sea and BBB Foods
Allowing for the 90-day total investment horizon Sea is expected to generate 2.3 times less return on investment than BBB Foods. In addition to that, Sea is 1.14 times more volatile than BBB Foods. It trades about 0.05 of its total potential returns per unit of risk. BBB Foods is currently generating about 0.12 per unit of volatility. If you would invest 1,750 in BBB Foods on August 26, 2024 and sell it today you would earn a total of 1,657 from holding BBB Foods or generate 94.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 51.27% |
| Values | Daily Returns |
Sea vs. BBB Foods
Performance |
| Timeline |
| Sea |
| BBB Foods |
Sea and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and BBB Foods
The main advantage of trading using opposite Sea and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
| BBB Foods vs. Hf Foods Group | BBB Foods vs. Innovative Food Hldg | BBB Foods vs. Calavo Growers | BBB Foods vs. The Chefs Warehouse |
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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