Correlation Between Global Develpmts and SEATech Ventures

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

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

Diversification Opportunities for Global Develpmts and SEATech Ventures

0.26

Correlation Coefficient

Global Develpmts  SEATech Ventures

Modest diversification

The 3 months correlation between Global and SEATech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Develpmts and SEATech Ventures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEATech Ventures Corp and Global Develpmts 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 Global Develpmts are associated (or correlated) with SEATech Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEATech Ventures Corp has no effect on the direction of Global Develpmts i.e., Global Develpmts and SEATech Ventures go up and down completely randomly.

Pair Corralation between Global Develpmts and SEATech Ventures

Given the investment horizon of 90 days Global Develpmts is expected to generate 45.06 times less return on investment than SEATech Ventures. But when comparing it to its historical volatility, Global Develpmts is 5.0 times less risky than SEATech Ventures. It trades about 0.01 of its potential returns per unit of risk. SEATech Ventures Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  22.00  in SEATech Ventures Corp on September 12, 2024 and sell it today you would lose (18.70) from holding SEATech Ventures Corp or give up 85.0% of portfolio value over 90 days.

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

Global Develpmts  vs.  SEATech Ventures Corp

Global Develpmts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Develpmts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Develpmts is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SEATech Ventures Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEATech Ventures Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, SEATech Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Develpmts and SEATech Ventures

The main advantage of trading using opposite Global Develpmts and SEATech Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Develpmts position performs unexpectedly, SEATech Ventures 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 SEATech Ventures will offset losses from the drop in SEATech Ventures' long position.

The idea behind Global Develpmts and SEATech Ventures Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.