Correlation Between Sea and MOBILE FACTORY

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

By analyzing existing cross correlation between Sea Limited and MOBILE FACTORY INC, you can compare the effects of market volatilities on Sea and MOBILE FACTORY 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 MOBILE FACTORY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and MOBILE FACTORY.

Diversification Opportunities for Sea and MOBILE FACTORY

0.45

Correlation Coefficient

Sea  MOBILE FACTORY

Very weak diversification

The 3 months correlation between Sea and MOBILE is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sea Limited and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 Limited are associated (or correlated) with MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Sea i.e., Sea and MOBILE FACTORY go up and down completely randomly.

Pair Corralation between Sea and MOBILE FACTORY

Assuming the 90 days horizon Sea Limited is expected to generate 1.14 times more return on investment than MOBILE FACTORY. However, Sea is 1.14 times more volatile than MOBILE FACTORY INC. It trades about 0.29 of its potential returns per unit of risk. MOBILE FACTORY INC is currently generating about -0.08 per unit of risk. If you would invest  10,460  in Sea Limited on October 22, 2024 and sell it today you would earn a total of  740.00  from holding Sea Limited or generate 7.07% return on investment over 90 days.

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

Sea Limited  vs.  MOBILE FACTORY INC

Sea Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sea reported solid returns over the last few months and may actually be approaching a breakup point.

MOBILE FACTORY INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MOBILE FACTORY INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOBILE FACTORY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sea and MOBILE FACTORY

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

The idea behind Sea Limited and MOBILE FACTORY INC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.