Correlation Between Sea and Chart Industries

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

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

Diversification Opportunities for Sea and Chart Industries

0.86

Correlation Coefficient

Sea  Chart Industries

Very poor diversification

The 3 months correlation between Sea and Chart is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Sea i.e., Sea and Chart Industries go up and down completely randomly.

Pair Corralation between Sea and Chart Industries

Allowing for the 90-day total investment horizon Sea is expected to under-perform the Chart Industries. But the stock apears to be less risky and, when comparing its historical volatility, Sea is 1.39 times less risky than Chart Industries. The stock trades about -0.28 of its potential returns per unit of risk. The Chart Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  19,099  in Chart Industries on October 5, 2024 and sell it today you would earn a total of  797.00  from holding Chart Industries or generate 4.17% return on investment over 90 days.

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

Sea  vs.  Chart Industries

Sea

Risk-Adjusted Performance

6 of 100

Modest

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 exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chart Industries

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sea and Chart Industries

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

The idea behind Sea and Chart Industries 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.