Correlation Between Sea and Springwater Special

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

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

Diversification Opportunities for Sea and Springwater Special

-0.6

Correlation Coefficient

Sea  Springwater Special

Excellent diversification

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

Pair Corralation between Sea and Springwater Special

If you would invest  8,240  in Sea on September 18, 2024 and sell it today you would earn a total of  3,221  from holding Sea or generate 39.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Sea  vs.  Springwater Special Situations

Sea

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 18 (%) 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.

Springwater Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Springwater Special Situations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Springwater Special is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sea and Springwater Special

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

The idea behind Sea and Springwater Special Situations 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.