Correlation Between Emerging Markets and Seafarer Overseas

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

By analyzing existing cross correlation between The Emerging Markets and Seafarer Overseas Growth, you can compare the effects of market volatilities on Emerging Markets and Seafarer Overseas 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 Emerging Markets with a short position of Seafarer Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Seafarer Overseas.

Diversification Opportunities for Emerging Markets and Seafarer Overseas

0.96

Correlation Coefficient

Emerging Markets  Seafarer Overseas

Almost no diversification

The 3 months correlation between Emerging and Seafarer is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Seafarer Overseas Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seafarer Overseas Growth and Emerging Markets 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 The Emerging Markets are associated (or correlated) with Seafarer Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seafarer Overseas Growth has no effect on the direction of Emerging Markets i.e., Emerging Markets and Seafarer Overseas go up and down completely randomly.

Pair Corralation between Emerging Markets and Seafarer Overseas

Assuming the 90 days horizon The Emerging Markets is expected to generate 1.27 times more return on investment than Seafarer Overseas. However, Emerging Markets is 1.27 times more volatile than Seafarer Overseas Growth. It trades about 0.18 of its potential returns per unit of risk. Seafarer Overseas Growth is currently generating about 0.16 per unit of risk. If you would invest  2,038  in The Emerging Markets on May 5, 2025 and sell it today you would earn a total of  191.00  from holding The Emerging Markets or generate 9.37% return on investment over 90 days.

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

The Emerging Markets  vs.  Seafarer Overseas Growth

Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerging Markets may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Seafarer Overseas Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seafarer Overseas Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Seafarer Overseas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Seafarer Overseas

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

The idea behind The Emerging Markets and Seafarer Overseas Growth 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.