Correlation Between Sea and Amdocs

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Can any of the company-specific risk be diversified away by investing in both Sea and Amdocs 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 Amdocs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Amdocs, you can compare the effects of market volatilities on Sea and Amdocs 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 Amdocs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Amdocs.

Diversification Opportunities for Sea and Amdocs

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Sea and Amdocs is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Amdocs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs 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 Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs has no effect on the direction of Sea i.e., Sea and Amdocs go up and down completely randomly.

Pair Corralation between Sea and Amdocs

Allowing for the 90-day total investment horizon Sea is expected to under-perform the Amdocs. In addition to that, Sea is 3.72 times more volatile than Amdocs. It trades about -0.02 of its total potential returns per unit of risk. Amdocs is currently generating about 0.05 per unit of volatility. If you would invest  6,553  in Amdocs on September 6, 2022 and sell it today you would earn a total of  2,464  from holding Amdocs or generate 37.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sea  vs.  Amdocs

 Performance (%) 
       Timeline  
Sea 
Sea Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sea Price Channel

Amdocs 
Amdocs Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amdocs are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Amdocs may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Amdocs Price Channel

Sea and Amdocs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sea and Amdocs

The main advantage of trading using opposite Sea and Amdocs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Amdocs 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 Amdocs will offset losses from the drop in Amdocs' long position.
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The idea behind Sea and Amdocs 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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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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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