Correlation Between SeAH Bestee and Home Center

Can any of the company-specific risk be diversified away by investing in both SeAH Bestee and Home Center 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 SeAH Bestee and Home Center into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SeAH Bestee and Home Center Holdings, you can compare the effects of market volatilities on SeAH Bestee and Home Center 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 SeAH Bestee with a short position of Home Center. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeAH Bestee and Home Center.

Diversification Opportunities for SeAH Bestee and Home Center

-0.51

Correlation Coefficient

SeAH Bestee  Home Center

Excellent diversification

The 3 months correlation between SeAH and Home is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SeAH Bestee and Home Center Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Center Holdings and SeAH Bestee 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 SeAH Bestee are associated (or correlated) with Home Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Center Holdings has no effect on the direction of SeAH Bestee i.e., SeAH Bestee and Home Center go up and down completely randomly.

Pair Corralation between SeAH Bestee and Home Center

Assuming the 90 days trading horizon SeAH Bestee is expected to generate 1.21 times more return on investment than Home Center. However, SeAH Bestee is 1.21 times more volatile than Home Center Holdings. It trades about 0.08 of its potential returns per unit of risk. Home Center Holdings is currently generating about -0.13 per unit of risk. If you would invest  1,979,000  in SeAH Bestee on September 2, 2024 and sell it today you would earn a total of  321,000  from holding SeAH Bestee or generate 16.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SeAH Bestee  vs.  Home Center Holdings

SeAH Bestee

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SeAH Bestee are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SeAH Bestee sustained solid returns over the last few months and may actually be approaching a breakup point.

Home Center Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Center Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SeAH Bestee and Home Center

The main advantage of trading using opposite SeAH Bestee and Home Center positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SeAH Bestee position performs unexpectedly, Home Center 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 Home Center will offset losses from the drop in Home Center's long position.

The idea behind SeAH Bestee and Home Center Holdings 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.