Correlation Between Sea Sonic and EirGenix

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

By analyzing existing cross correlation between Sea Sonic Electronics and EirGenix, you can compare the effects of market volatilities on Sea Sonic and EirGenix 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 Sonic with a short position of EirGenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Sonic and EirGenix.

Diversification Opportunities for Sea Sonic and EirGenix

-0.43

Correlation Coefficient

Sea Sonic  EirGenix

Very good diversification

The 3 months correlation between Sea and EirGenix is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sea Sonic Electronics and EirGenix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EirGenix and Sea Sonic 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 Sonic Electronics are associated (or correlated) with EirGenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EirGenix has no effect on the direction of Sea Sonic i.e., Sea Sonic and EirGenix go up and down completely randomly.

Pair Corralation between Sea Sonic and EirGenix

Assuming the 90 days trading horizon Sea Sonic Electronics is expected to generate 0.71 times more return on investment than EirGenix. However, Sea Sonic Electronics is 1.41 times less risky than EirGenix. It trades about 0.31 of its potential returns per unit of risk. EirGenix is currently generating about -0.14 per unit of risk. If you would invest  6,490  in Sea Sonic Electronics on October 11, 2024 and sell it today you would earn a total of  970.00  from holding Sea Sonic Electronics or generate 14.95% return on investment over 90 days.

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

Sea Sonic Electronics  vs.  EirGenix

Sea Sonic Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Sonic Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sea Sonic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EirGenix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EirGenix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sea Sonic and EirGenix

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

The idea behind Sea Sonic Electronics and EirGenix 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.