Correlation Between Alpha Esports and Sea

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

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

Diversification Opportunities for Alpha Esports and Sea

0.0

Correlation Coefficient

Alpha Esports  Sea

Pay attention - limited upside

The 3 months correlation between Alpha and Sea is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Esports Tech and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and Alpha Esports 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 Alpha Esports Tech 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 has no effect on the direction of Alpha Esports i.e., Alpha Esports and Sea go up and down completely randomly.

Pair Corralation between Alpha Esports and Sea

Assuming the 90 days horizon Alpha Esports Tech is expected to generate 9.24 times more return on investment than Sea. However, Alpha Esports is 9.24 times more volatile than Sea. It trades about 0.12 of its potential returns per unit of risk. Sea is currently generating about 0.11 per unit of risk. If you would invest  0.82  in Alpha Esports Tech on December 27, 2024 and sell it today you would lose (0.02) from holding Alpha Esports Tech or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alpha Esports Tech  vs.  Sea

Alpha Esports Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Esports Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alpha Esports reported solid returns over the last few months and may actually be approaching a breakup point.

Sea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Esports and Sea

The main advantage of trading using opposite Alpha Esports and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Esports 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.

The idea behind Alpha Esports Tech and Sea 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.