Correlation Between Seafarer Exploration and BIO Key
Can any of the company-specific risk be diversified away by investing in both Seafarer Exploration and BIO Key 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 Seafarer Exploration and BIO Key into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seafarer Exploration and BIO Key International, you can compare the effects of market volatilities on Seafarer Exploration and BIO Key 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 Seafarer Exploration with a short position of BIO Key. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seafarer Exploration and BIO Key.
Diversification Opportunities for Seafarer Exploration and BIO Key
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seafarer and BIO is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Seafarer Exploration and BIO Key International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO Key International and Seafarer Exploration 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 Seafarer Exploration are associated (or correlated) with BIO Key. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO Key International has no effect on the direction of Seafarer Exploration i.e., Seafarer Exploration and BIO Key go up and down completely randomly.
Pair Corralation between Seafarer Exploration and BIO Key
Given the investment horizon of 90 days Seafarer Exploration is expected to generate 26.52 times less return on investment than BIO Key. But when comparing it to its historical volatility, Seafarer Exploration is 5.48 times less risky than BIO Key. It trades about 0.05 of its potential returns per unit of risk. BIO Key International is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 95.00 in BIO Key International on October 24, 2024 and sell it today you would earn a total of 86.00 from holding BIO Key International or generate 90.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seafarer Exploration vs. BIO Key International
Performance |
| Timeline |
| Seafarer Exploration |
| BIO Key International |
Seafarer Exploration and BIO Key Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seafarer Exploration and BIO Key
The main advantage of trading using opposite Seafarer Exploration and BIO Key positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seafarer Exploration position performs unexpectedly, BIO Key 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 BIO Key will offset losses from the drop in BIO Key's long position.| Seafarer Exploration vs. All American Pet | Seafarer Exploration vs. Odyssey Marine Exploration | Seafarer Exploration vs. Network 1 Technologies | Seafarer Exploration vs. DLH Holdings Corp |
| BIO Key vs. LogicMark | BIO Key vs. SSC Security Services | BIO Key vs. ICTS International NV | BIO Key vs. Senstar Technologies |
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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