Correlation Between Sea Oil and Eureka Design

Can any of the company-specific risk be diversified away by investing in both Sea Oil and Eureka Design 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 Eureka Design 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 Eureka Design Public, you can compare the effects of market volatilities on Sea Oil and Eureka Design 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 Eureka Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Oil and Eureka Design.

Diversification Opportunities for Sea Oil and Eureka Design

-0.26

Correlation Coefficient

Sea Oil  Eureka Design

Very good diversification

The 3 months correlation between Sea and Eureka is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sea Oil Public and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design 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 Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of Sea Oil i.e., Sea Oil and Eureka Design go up and down completely randomly.

Pair Corralation between Sea Oil and Eureka Design

Assuming the 90 days trading horizon Sea Oil Public is expected to generate 0.36 times more return on investment than Eureka Design. However, Sea Oil Public is 2.76 times less risky than Eureka Design. It trades about 0.07 of its potential returns per unit of risk. Eureka Design Public is currently generating about -0.09 per unit of risk. If you would invest  240.00  in Sea Oil Public on December 23, 2024 and sell it today you would earn a total of  12.00  from holding Sea Oil Public or generate 5.0% 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.  Eureka Design Public

Sea Oil Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea Oil Public are ranked lower than 5 (%) 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.

Eureka Design Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eureka Design Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sea Oil and Eureka Design

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

The idea behind Sea Oil Public and Eureka Design 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.