Correlation Between Sea and Altice USA

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

By analyzing existing cross correlation between Sea and Altice USA, you can compare the effects of market volatilities on Sea and Altice USA 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 Altice USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Altice USA.

Diversification Opportunities for Sea and Altice USA

0.74

Correlation Coefficient

Sea  Altice USA

Poor diversification

The 3 months correlation between Sea and Altice is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA 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 Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of Sea i.e., Sea and Altice USA go up and down completely randomly.

Pair Corralation between Sea and Altice USA

Allowing for the 90-day total investment horizon Sea is expected to generate 0.56 times more return on investment than Altice USA. However, Sea is 1.8 times less risky than Altice USA. It trades about 0.28 of its potential returns per unit of risk. Altice USA is currently generating about 0.13 per unit of risk. If you would invest  7,740  in Sea on September 1, 2024 and sell it today you would earn a total of  3,640  from holding Sea or generate 47.03% return on investment over 90 days.

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

Sea  vs.  Altice USA

Sea

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Altice USA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sea and Altice USA

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

The idea behind Sea and Altice USA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.