Correlation Between Nordon Indstrias and Sea

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

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

Diversification Opportunities for Nordon Indstrias and Sea

-0.85

Correlation Coefficient

Nordon Indstrias  Sea

Pay attention - limited upside

The 3 months correlation between Nordon and Sea is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and Sea Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea Limited and Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Nordon Indstrias i.e., Nordon Indstrias and Sea go up and down completely randomly.

Pair Corralation between Nordon Indstrias and Sea

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 2.86 times more return on investment than Sea. However, Nordon Indstrias is 2.86 times more volatile than Sea Limited. It trades about 0.04 of its potential returns per unit of risk. Sea Limited is currently generating about 0.06 per unit of risk. If you would invest  565.00  in Nordon Indstrias Metalrgicas on October 23, 2024 and sell it today you would earn a total of  45.00  from holding Nordon Indstrias Metalrgicas or generate 7.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.99%
Values	Daily Returns

Nordon Indstrias Metalrgicas  vs.  Sea Limited

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Limited are ranked lower than 12 (%) 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 Nordon Indstrias and Sea

The main advantage of trading using opposite Nordon Indstrias and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.