Correlation Between Take Two and Sea
Can any of the company-specific risk be diversified away by investing in both Take Two and Sea 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 Take Two and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Sea Limited, you can compare the effects of market volatilities on Take Two and Sea 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 Take Two with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Sea.
Diversification Opportunities for Take Two and Sea
Poor diversification
The 3 months correlation between Take and Sea is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Take Two 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 Take Two Interactive Software are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea Limited has no effect on the direction of Take Two i.e., Take Two and Sea go up and down completely randomly.
Pair Corralation between Take Two and Sea
Assuming the 90 days horizon Take Two is expected to generate 2.02 times less return on investment than Sea. But when comparing it to its historical volatility, Take Two Interactive Software is 1.51 times less risky than Sea. It trades about 0.22 of its potential returns per unit of risk. Sea Limited is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 7,000 in Sea Limited on August 29, 2024 and sell it today you would earn a total of 3,800 from holding Sea Limited or generate 54.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Take Two Interactive Software vs. Sea Limited
Performance |
| Timeline |
| Take Two Interactive |
| Sea Limited |
Take Two and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Sea
The main advantage of trading using opposite Take Two and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Take Two vs. Sea Limited | Take Two vs. Superior Plus Corp | Take Two vs. NMI Holdings | Take Two vs. SIVERS SEMICONDUCTORS AB |
| Sea vs. Live Nation Entertainment | Sea vs. United Breweries Co | Sea vs. Fevertree Drinks PLC | Sea vs. Universal 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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