Correlation Between GX AI and Sea

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

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

Diversification Opportunities for GX AI and Sea

-0.29

Correlation Coefficient

GX AI  Sea

Very good diversification

The 3 months correlation between BAIQ39 and Sea is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and GX AI 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 GX AI 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 Limited has no effect on the direction of GX AI i.e., GX AI and Sea go up and down completely randomly.

Pair Corralation between GX AI and Sea

Assuming the 90 days trading horizon GX AI TECH is expected to under-perform the Sea. But the stock apears to be less risky and, when comparing its historical volatility, GX AI TECH is 1.06 times less risky than Sea. The stock trades about -0.06 of its potential returns per unit of risk. The Sea Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,705  in Sea Limited on December 23, 2024 and sell it today you would earn a total of  114.00  from holding Sea Limited or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

GX AI TECH  vs.  Sea Limited

GX AI TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GX AI TECH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sea Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Sea may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GX AI and Sea

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

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.