Correlation Between Sea and Par Pacific

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

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

Diversification Opportunities for Sea and Par Pacific

-0.29

Correlation Coefficient

Sea  Par Pacific

Very good diversification

The 3 months correlation between Sea and Par is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific 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 Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of Sea i.e., Sea and Par Pacific go up and down completely randomly.

Pair Corralation between Sea and Par Pacific

Allowing for the 90-day total investment horizon Sea is expected to generate 0.61 times more return on investment than Par Pacific. However, Sea is 1.64 times less risky than Par Pacific. It trades about -0.05 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.09 per unit of risk. If you would invest  11,393  in Sea on September 27, 2024 and sell it today you would lose (246.00) from holding Sea or give up 2.16% of portfolio value over 90 days.

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

Sea  vs.  Par Pacific Holdings

Sea

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 9 (%) 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.

Par Pacific Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sea and Par Pacific

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

The idea behind Sea and Par Pacific 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .