Correlation Between SEAS Old and OneSpaWorld Holdings

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

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

Diversification Opportunities for SEAS Old and OneSpaWorld Holdings

0.48

Correlation Coefficient

SEAS Old  OneSpaWorld Holdings

Very weak diversification

The 3 months correlation between SEAS and OneSpaWorld is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SEAS Old and OneSpaWorld Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSpaWorld Holdings and SEAS Old 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 SEAS Old are associated (or correlated) with OneSpaWorld Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSpaWorld Holdings has no effect on the direction of SEAS Old i.e., SEAS Old and OneSpaWorld Holdings go up and down completely randomly.

Pair Corralation between SEAS Old and OneSpaWorld Holdings

If you would invest  1,737  in OneSpaWorld Holdings on October 25, 2024 and sell it today you would earn a total of  259.00  from holding OneSpaWorld Holdings or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.67%
Values	Daily Returns

SEAS Old  vs.  OneSpaWorld Holdings

SEAS Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

OneSpaWorld Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OneSpaWorld Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OneSpaWorld Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEAS Old and OneSpaWorld Holdings

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

The idea behind SEAS Old and OneSpaWorld Holdings 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.