Correlation Between Sea1 Offshore and Photocure

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

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

Diversification Opportunities for Sea1 Offshore and Photocure

-0.15

Correlation Coefficient

Sea1 Offshore  Photocure

Good diversification

The 3 months correlation between Sea1 and Photocure is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sea1 Offshore and Photocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocure 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 Photocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photocure has no effect on the direction of Sea1 Offshore i.e., Sea1 Offshore and Photocure go up and down completely randomly.

Pair Corralation between Sea1 Offshore and Photocure

Assuming the 90 days trading horizon Sea1 Offshore is expected to generate 1.41 times more return on investment than Photocure. However, Sea1 Offshore is 1.41 times more volatile than Photocure. It trades about 0.07 of its potential returns per unit of risk. Photocure is currently generating about -0.1 per unit of risk. If you would invest  2,665  in Sea1 Offshore on September 4, 2024 and sell it today you would earn a total of  85.00  from holding Sea1 Offshore or generate 3.19% 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.  Photocure

Sea1 Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sea1 Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Sea1 Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Photocure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Photocure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sea1 Offshore and Photocure

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

The idea behind Sea1 Offshore and Photocure 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.