Correlation Between Sea Oil and SVI Public

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

By analyzing existing cross correlation between Sea Oil Public and SVI Public, you can compare the effects of market volatilities on Sea Oil and SVI Public 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 Oil with a short position of SVI Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Oil and SVI Public.

Diversification Opportunities for Sea Oil and SVI Public

-0.38

Correlation Coefficient

Sea Oil  SVI Public

Very good diversification

The 3 months correlation between Sea and SVI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sea Oil Public and SVI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVI Public and Sea Oil 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 Oil Public are associated (or correlated) with SVI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVI Public has no effect on the direction of Sea Oil i.e., Sea Oil and SVI Public go up and down completely randomly.

Pair Corralation between Sea Oil and SVI Public

Assuming the 90 days trading horizon Sea Oil Public is expected to generate 0.36 times more return on investment than SVI Public. However, Sea Oil Public is 2.76 times less risky than SVI Public. It trades about 0.04 of its potential returns per unit of risk. SVI Public is currently generating about -0.05 per unit of risk. If you would invest  252.00  in Sea Oil Public on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Sea Oil Public or generate 2.38% return on investment over 90 days.

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

Sea Oil Public  vs.  SVI Public

Sea Oil Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Oil Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sea Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SVI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward 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 Sea Oil and SVI Public

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

The idea behind Sea Oil Public and SVI Public 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.