Correlation Between SOUTHWEST AIRLINES and SEAZEN GROUP

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

By analyzing existing cross correlation between SOUTHWEST AIRLINES and SEAZEN GROUP LTD, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and SEAZEN GROUP 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 SOUTHWEST AIRLINES with a short position of SEAZEN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and SEAZEN GROUP.

Diversification Opportunities for SOUTHWEST AIRLINES and SEAZEN GROUP

-0.59

Correlation Coefficient

SOUTHWEST AIRLINES  SEAZEN GROUP

Excellent diversification

The 3 months correlation between SOUTHWEST and SEAZEN is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and SEAZEN GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEAZEN GROUP LTD and SOUTHWEST AIRLINES 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 SOUTHWEST AIRLINES are associated (or correlated) with SEAZEN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEAZEN GROUP LTD has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and SEAZEN GROUP go up and down completely randomly.

Pair Corralation between SOUTHWEST AIRLINES and SEAZEN GROUP

Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to under-perform the SEAZEN GROUP. But the stock apears to be less risky and, when comparing its historical volatility, SOUTHWEST AIRLINES is 1.4 times less risky than SEAZEN GROUP. The stock trades about 0.0 of its potential returns per unit of risk. The SEAZEN GROUP LTD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  22.00  in SEAZEN GROUP LTD on December 23, 2024 and sell it today you would earn a total of  2.00  from holding SEAZEN GROUP LTD or generate 9.09% return on investment over 90 days.

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

SOUTHWEST AIRLINES  vs.  SEAZEN GROUP LTD

SOUTHWEST AIRLINES

Risk-Adjusted Performance

Very Weak

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

SEAZEN GROUP LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEAZEN GROUP LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, SEAZEN GROUP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SOUTHWEST AIRLINES and SEAZEN GROUP

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

The idea behind SOUTHWEST AIRLINES and SEAZEN GROUP LTD 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.