Correlation Between Enjoei SA and Sea

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

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

Diversification Opportunities for Enjoei SA and Sea

-0.78

Correlation Coefficient

Enjoei SA  Sea

Pay attention - limited upside

The 3 months correlation between Enjoei and Sea is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Enjoei SA and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Enjoei SA 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 Enjoei SA 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 Enjoei SA i.e., Enjoei SA and Sea go up and down completely randomly.

Pair Corralation between Enjoei SA and Sea

Assuming the 90 days trading horizon Enjoei SA is expected to under-perform the Sea. In addition to that, Enjoei SA is 1.27 times more volatile than Sea Limited. It trades about -0.01 of its total potential returns per unit of risk. Sea Limited is currently generating about 0.08 per unit of volatility. If you would invest  1,271  in Sea Limited on September 24, 2024 and sell it today you would earn a total of  1,435  from holding Sea Limited or generate 112.9% return on investment over 90 days.

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

Enjoei SA  vs.  Sea Limited

Enjoei SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enjoei SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Limited

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Sea sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enjoei SA and Sea

The main advantage of trading using opposite Enjoei SA and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enjoei SA 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 Enjoei SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.