Correlation Between SEALED AIR and Focus Home

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

By analyzing existing cross correlation between SEALED AIR and Focus Home Interactive, you can compare the effects of market volatilities on SEALED AIR and Focus Home 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 SEALED AIR with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Focus Home.

Diversification Opportunities for SEALED AIR and Focus Home

-0.3

Correlation Coefficient

SEALED AIR  Focus Home

Very good diversification

The 3 months correlation between SEALED and Focus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and SEALED AIR 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 SEALED AIR are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of SEALED AIR i.e., SEALED AIR and Focus Home go up and down completely randomly.

Pair Corralation between SEALED AIR and Focus Home

Assuming the 90 days trading horizon SEALED AIR is expected to generate 18.55 times less return on investment than Focus Home. But when comparing it to its historical volatility, SEALED AIR is 2.9 times less risky than Focus Home. It trades about 0.01 of its potential returns per unit of risk. Focus Home Interactive is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,572  in Focus Home Interactive on October 9, 2024 and sell it today you would earn a total of  753.00  from holding Focus Home Interactive or generate 47.9% return on investment over 90 days.

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

SEALED AIR   vs.  Focus Home Interactive

SEALED AIR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SEALED AIR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Focus Home Interactive

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Focus Home may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SEALED AIR and Focus Home

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

The idea behind SEALED AIR and Focus Home Interactive 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .