Correlation Between Sea and LiveOne

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

By analyzing existing cross correlation between Sea and LiveOne, you can compare the effects of market volatilities on Sea and LiveOne 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 LiveOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and LiveOne.

Diversification Opportunities for Sea and LiveOne

0.1

Correlation Coefficient

Sea  LiveOne

Average diversification

The 3 months correlation between Sea and LiveOne is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sea and LiveOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveOne 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 LiveOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveOne has no effect on the direction of Sea i.e., Sea and LiveOne go up and down completely randomly.

Pair Corralation between Sea and LiveOne

Allowing for the 90-day total investment horizon Sea is expected to generate 0.45 times more return on investment than LiveOne. However, Sea is 2.21 times less risky than LiveOne. It trades about 0.07 of its potential returns per unit of risk. LiveOne is currently generating about 0.01 per unit of risk. If you would invest  14,253  in Sea on May 7, 2025 and sell it today you would earn a total of  1,421  from holding Sea or generate 9.97% return on investment over 90 days.

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

Sea  vs.  LiveOne

Sea

Risk-Adjusted Performance

Mild

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 inconsistent technical and fundamental indicators, Sea may actually be approaching a critical reversion point that can send shares even higher in September 2025.

LiveOne

Risk-Adjusted Performance

Weakest

Over the last 90 days LiveOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, LiveOne is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sea and LiveOne

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

The idea behind Sea and LiveOne 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.