Correlation Between ChargePoint Holdings and Sea

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

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

Diversification Opportunities for ChargePoint Holdings and Sea

-0.57

Correlation Coefficient

ChargePoint Holdings  Sea

Excellent diversification

The 3 months correlation between ChargePoint and Sea is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint Holdings and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and ChargePoint Holdings 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 ChargePoint Holdings 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 ChargePoint Holdings i.e., ChargePoint Holdings and Sea go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and Sea

Given the investment horizon of 90 days ChargePoint Holdings is expected to generate 2.9 times more return on investment than Sea. However, ChargePoint Holdings is 2.9 times more volatile than Sea. It trades about 0.03 of its potential returns per unit of risk. Sea is currently generating about -0.05 per unit of risk. If you would invest  115.00  in ChargePoint Holdings on September 27, 2024 and sell it today you would earn a total of  1.00  from holding ChargePoint Holdings or generate 0.87% return on investment over 90 days.

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

ChargePoint Holdings  vs.  Sea

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sea

Risk-Adjusted Performance

9 of 100

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 ChargePoint Holdings and Sea

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

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.