Correlation Between Ocean Power and SEB SA
Can any of the company-specific risk be diversified away by investing in both Ocean Power and SEB SA 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 Ocean Power and SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Power Technologies and SEB SA, you can compare the effects of market volatilities on Ocean Power and SEB SA 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 Ocean Power with a short position of SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Power and SEB SA.
Diversification Opportunities for Ocean Power and SEB SA
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ocean and SEB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Power Technologies and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA and Ocean Power 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 Ocean Power Technologies are associated (or correlated) with SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Ocean Power i.e., Ocean Power and SEB SA go up and down completely randomly.
Pair Corralation between Ocean Power and SEB SA
Given the investment horizon of 90 days Ocean Power Technologies is expected to generate 9.58 times more return on investment than SEB SA. However, Ocean Power is 9.58 times more volatile than SEB SA. It trades about 0.07 of its potential returns per unit of risk. SEB SA is currently generating about 0.11 per unit of risk. If you would invest 48.00 in Ocean Power Technologies on December 27, 2024 and sell it today you would earn a total of 2.00 from holding Ocean Power Technologies or generate 4.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 70.0% |
Values | Daily Returns |
Ocean Power Technologies vs. SEB SA
Performance |
Timeline |
Ocean Power Technologies |
SEB SA |
Ocean Power and SEB SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ocean Power and SEB SA
The main advantage of trading using opposite Ocean Power and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Power position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.Ocean Power vs. Pioneer Power Solutions | Ocean Power vs. CBAK Energy Technology | Ocean Power vs. Ideal Power | Ocean Power vs. Expion360 |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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