Correlation Between Dell Technologies and Sea

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

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

Diversification Opportunities for Dell Technologies and Sea

-0.02

Correlation Coefficient

Dell Technologies  Sea

Good diversification

The 3 months correlation between Dell and Sea is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Dell Technologies 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 Dell Technologies 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 Dell Technologies i.e., Dell Technologies and Sea go up and down completely randomly.

Pair Corralation between Dell Technologies and Sea

Assuming the 90 days trading horizon Dell Technologies is expected to generate 1.15 times more return on investment than Sea. However, Dell Technologies is 1.15 times more volatile than Sea Limited. It trades about 0.1 of its potential returns per unit of risk. Sea Limited is currently generating about 0.08 per unit of risk. If you would invest  22,057  in Dell Technologies on October 24, 2024 and sell it today you would earn a total of  46,501  from holding Dell Technologies or generate 210.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.86%
Values	Daily Returns

Dell Technologies  vs.  Sea Limited

Dell Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Dell Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sea Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Sea sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dell Technologies and Sea

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

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.