Correlation Between Sea and Focus Home
Can any of the company-specific risk be diversified away by investing in both Sea and Focus Home 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 Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Limited and Focus Home Interactive, you can compare the effects of market volatilities on Sea and Focus Home 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 Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Focus Home.
Diversification Opportunities for Sea and Focus Home
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sea and Focus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sea Limited and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 Limited are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Sea i.e., Sea and Focus Home go up and down completely randomly.
Pair Corralation between Sea and Focus Home
Assuming the 90 days horizon Sea Limited is expected to under-perform the Focus Home. But the stock apears to be less risky and, when comparing its historical volatility, Sea Limited is 1.03 times less risky than Focus Home. The stock trades about -0.24 of its potential returns per unit of risk. The Focus Home Interactive is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,148 in Focus Home Interactive on September 12, 2025 and sell it today you would lose (480.00) from holding Focus Home Interactive or give up 22.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea Limited vs. Focus Home Interactive
Performance |
| Timeline |
| Sea Limited |
| Focus Home Interactive |
Sea and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Focus Home
The main advantage of trading using opposite Sea and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| Sea vs. PLAYTIKA HOLDING DL 01 | Sea vs. ePlay Digital | Sea vs. JLF INVESTMENT | Sea vs. COLUMBIA SPORTSWEAR |
| Focus Home vs. Electronic Arts | Focus Home vs. Take Two Interactive Software | Focus Home vs. Aristocrat Leisure Limited | Focus Home vs. Origin Agritech |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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