Correlation Between Sea and Affiliated Resources

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

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

Diversification Opportunities for Sea and Affiliated Resources

-0.44

Correlation Coefficient

Sea  Affiliated Resources

Very good diversification

The 3 months correlation between Sea and Affiliated is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp and Sea 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 Sea are associated (or correlated) with Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Sea i.e., Sea and Affiliated Resources go up and down completely randomly.

Pair Corralation between Sea and Affiliated Resources

Allowing for the 90-day total investment horizon Sea is expected to generate 0.1 times more return on investment than Affiliated Resources. However, Sea is 9.66 times less risky than Affiliated Resources. It trades about -0.18 of its potential returns per unit of risk. Affiliated Resources Corp is currently generating about -0.07 per unit of risk. If you would invest  11,415  in Sea on October 10, 2024 and sell it today you would lose (773.00) from holding Sea or give up 6.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Sea  vs.  Affiliated Resources Corp

Sea

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Affiliated Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sea and Affiliated Resources

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

The idea behind Sea and Affiliated Resources 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.