Correlation Between Sea and Endeavor Group

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

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

Diversification Opportunities for Sea and Endeavor Group

0.9

Correlation Coefficient

Sea  Endeavor Group

Almost no diversification

The 3 months correlation between Sea and Endeavor is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Endeavor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavor Group 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 Endeavor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavor Group Holdings has no effect on the direction of Sea i.e., Sea and Endeavor Group go up and down completely randomly.

Pair Corralation between Sea and Endeavor Group

Allowing for the 90-day total investment horizon Sea is expected to generate 4.06 times more return on investment than Endeavor Group. However, Sea is 4.06 times more volatile than Endeavor Group Holdings. It trades about 0.27 of its potential returns per unit of risk. Endeavor Group Holdings is currently generating about 0.28 per unit of risk. If you would invest  7,740  in Sea on September 2, 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

Sea  vs.  Endeavor Group Holdings

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 fragile technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Endeavor Group Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavor Group Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Endeavor Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sea and Endeavor Group

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

The idea behind Sea and Endeavor Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.