Correlation Between Sea and ZW Data

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

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

Diversification Opportunities for Sea and ZW Data

-0.37

Correlation Coefficient

Sea  ZW Data

Very good diversification

The 3 months correlation between Sea and CNET is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sea and ZW Data Action in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZW Data Action and Sea 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 Sea are associated (or correlated) with ZW Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZW Data Action has no effect on the direction of Sea i.e., Sea and ZW Data go up and down completely randomly.

Pair Corralation between Sea and ZW Data

Allowing for the 90-day total investment horizon Sea is expected to generate 0.32 times more return on investment than ZW Data. However, Sea is 3.14 times less risky than ZW Data. It trades about 0.26 of its potential returns per unit of risk. ZW Data Action is currently generating about 0.06 per unit of risk. If you would invest  11,653  in Sea on April 21, 2025 and sell it today you would earn a total of  5,202  from holding Sea or generate 44.64% return on investment over 90 days.

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

Sea  vs.  ZW Data Action

Sea

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

ZW Data Action

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZW Data Action are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, ZW Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sea and ZW Data

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

The idea behind Sea and ZW Data Action 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 Global Correlations module to find global opportunities by holding instruments from different markets.