Correlation Between Western Acquisition and Sea

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

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

Diversification Opportunities for Western Acquisition and Sea

-0.41

Correlation Coefficient

Western Acquisition  Sea

Very good diversification

The 3 months correlation between Western and Sea is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Sea go up and down completely randomly.

Pair Corralation between Western Acquisition and Sea

Given the investment horizon of 90 days Western Acquisition Ventures is expected to under-perform the Sea. In addition to that, Western Acquisition is 1.05 times more volatile than Sea. It trades about -0.15 of its total potential returns per unit of risk. Sea is currently generating about 0.14 per unit of volatility. If you would invest  9,915  in Sea on October 25, 2024 and sell it today you would earn a total of  1,921  from holding Sea or generate 19.37% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Sea

Western Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Acquisition Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sea

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Acquisition and Sea

The main advantage of trading using opposite Western Acquisition and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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 Western Acquisition Ventures 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.

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 CEOs Directory module to screen CEOs from public companies around the world.