Correlation Between HUBBELL and Sea

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

By analyzing existing cross correlation between HUBBELL INC 35 and Sea, you can compare the effects of market volatilities on HUBBELL and Sea 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 HUBBELL with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUBBELL and Sea.

Diversification Opportunities for HUBBELL and Sea

-0.22

Correlation Coefficient

HUBBELL  Sea

Very good diversification

The 3 months correlation between HUBBELL and Sea is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding HUBBELL INC 35 and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and HUBBELL 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 HUBBELL INC 35 are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of HUBBELL i.e., HUBBELL and Sea go up and down completely randomly.

Pair Corralation between HUBBELL and Sea

Assuming the 90 days trading horizon HUBBELL INC 35 is expected to generate 0.45 times more return on investment than Sea. However, HUBBELL INC 35 is 2.21 times less risky than Sea. It trades about -0.26 of its potential returns per unit of risk. Sea is currently generating about -0.19 per unit of risk. If you would invest  9,649  in HUBBELL INC 35 on October 12, 2024 and sell it today you would lose (362.00) from holding HUBBELL INC 35 or give up 3.75% of portfolio value over 90 days.

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

HUBBELL INC 35  vs.  Sea

HUBBELL INC 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUBBELL INC 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUBBELL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sea

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HUBBELL and Sea

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

The idea behind HUBBELL INC 35 and Sea 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.