Correlation Between Sea and NFT

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

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

Diversification Opportunities for Sea and NFT

-0.6

Correlation Coefficient

Sea  NFT

Excellent diversification

The 3 months correlation between Sea and NFT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sea and NFT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFT Limited 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 NFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFT Limited has no effect on the direction of Sea i.e., Sea and NFT go up and down completely randomly.

Pair Corralation between Sea and NFT

Allowing for the 90-day total investment horizon Sea is expected to generate 0.33 times more return on investment than NFT. However, Sea is 3.06 times less risky than NFT. It trades about 0.11 of its potential returns per unit of risk. NFT Limited is currently generating about -0.15 per unit of risk. If you would invest  10,965  in Sea on December 25, 2024 and sell it today you would earn a total of  1,983  from holding Sea or generate 18.08% return on investment over 90 days.

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

Sea  vs.  NFT Limited

Sea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 8 (%) 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.

NFT Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NFT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Sea and NFT

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

The idea behind Sea and NFT Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..