Correlation Between Neogrid Participaes and Sea

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

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

Diversification Opportunities for Neogrid Participaes and Sea

-0.05

Correlation Coefficient

Neogrid Participaes  Sea

Good diversification

The 3 months correlation between Neogrid and Sea is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Neogrid Participaes SA and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Neogrid Participaes 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 Neogrid Participaes 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 Neogrid Participaes i.e., Neogrid Participaes and Sea go up and down completely randomly.

Pair Corralation between Neogrid Participaes and Sea

Assuming the 90 days trading horizon Neogrid Participaes SA is expected to generate 36.54 times more return on investment than Sea. However, Neogrid Participaes is 36.54 times more volatile than Sea Limited. It trades about 0.08 of its potential returns per unit of risk. Sea Limited is currently generating about 0.21 per unit of risk. If you would invest  3,100  in Neogrid Participaes SA on October 5, 2024 and sell it today you would lose (956.00) from holding Neogrid Participaes SA or give up 30.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Neogrid Participaes SA  vs.  Sea Limited

Neogrid Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogrid Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 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 Neogrid Participaes and Sea

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

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..