Correlation Between Sea1 Offshore and Exact Therapeutics

Can any of the company-specific risk be diversified away by investing in both Sea1 Offshore and Exact Therapeutics 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 Sea1 Offshore and Exact Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sea1 Offshore and Exact Therapeutics AS, you can compare the effects of market volatilities on Sea1 Offshore and Exact Therapeutics 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 Sea1 Offshore with a short position of Exact Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea1 Offshore and Exact Therapeutics.

Diversification Opportunities for Sea1 Offshore and Exact Therapeutics

-0.19

Correlation Coefficient

Sea1 Offshore  Exact Therapeutics

Good diversification

The 3 months correlation between Sea1 and Exact is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sea1 Offshore and Exact Therapeutics AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exact Therapeutics and Sea1 Offshore 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 Sea1 Offshore are associated (or correlated) with Exact Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exact Therapeutics has no effect on the direction of Sea1 Offshore i.e., Sea1 Offshore and Exact Therapeutics go up and down completely randomly.

Pair Corralation between Sea1 Offshore and Exact Therapeutics

Assuming the 90 days trading horizon Sea1 Offshore is expected to generate 0.67 times more return on investment than Exact Therapeutics. However, Sea1 Offshore is 1.49 times less risky than Exact Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Exact Therapeutics AS is currently generating about 0.01 per unit of risk. If you would invest  1,873  in Sea1 Offshore on December 20, 2024 and sell it today you would earn a total of  267.00  from holding Sea1 Offshore or generate 14.26% return on investment over 90 days.

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

Sea1 Offshore  vs.  Exact Therapeutics AS

Sea1 Offshore

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea1 Offshore are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sea1 Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Exact Therapeutics

Risk-Adjusted Performance

Weak

Over the last 90 days Exact Therapeutics AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Exact Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sea1 Offshore and Exact Therapeutics

The main advantage of trading using opposite Sea1 Offshore and Exact Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea1 Offshore position performs unexpectedly, Exact Therapeutics 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 Exact Therapeutics will offset losses from the drop in Exact Therapeutics' long position.

The idea behind Sea1 Offshore and Exact Therapeutics AS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.