Correlation Between Sea and ChargePoint Holdings

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

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

Diversification Opportunities for Sea and ChargePoint Holdings

-0.44

Correlation Coefficient

Sea  ChargePoint Holdings

Very good diversification

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

Pair Corralation between Sea and ChargePoint Holdings

Allowing for the 90-day total investment horizon Sea is expected to generate 0.65 times more return on investment than ChargePoint Holdings. However, Sea is 1.53 times less risky than ChargePoint Holdings. It trades about 0.05 of its potential returns per unit of risk. ChargePoint Holdings is currently generating about -0.06 per unit of risk. If you would invest  6,400  in Sea on October 15, 2024 and sell it today you would earn a total of  4,429  from holding Sea or generate 69.2% return on investment over 90 days.

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

Sea  vs.  ChargePoint Holdings

Sea

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 7 (%) 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.

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sea and ChargePoint Holdings

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

The idea behind Sea and ChargePoint Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..