Correlation Between Sea and Miniso Group

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

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

Diversification Opportunities for Sea and Miniso Group

0.61

Correlation Coefficient

Sea  Miniso Group

Poor diversification

The 3 months correlation between Sea and Miniso is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Miniso Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miniso Group Holding 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 Miniso Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miniso Group Holding has no effect on the direction of Sea i.e., Sea and Miniso Group go up and down completely randomly.

Pair Corralation between Sea and Miniso Group

Allowing for the 90-day total investment horizon Sea is expected to generate 0.65 times more return on investment than Miniso Group. However, Sea is 1.54 times less risky than Miniso Group. It trades about 0.16 of its potential returns per unit of risk. Miniso Group Holding is currently generating about 0.02 per unit of risk. If you would invest  3,972  in Sea on September 23, 2024 and sell it today you would earn a total of  7,092  from holding Sea or generate 178.55% return on investment over 90 days.

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

Sea  vs.  Miniso Group Holding

Sea

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 11 (%) 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.

Miniso Group Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Miniso Group Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Miniso Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sea and Miniso Group

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

The idea behind Sea and Miniso Group Holding 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.