MELI and SE Correlation
Atualizado
MercadoLibre (
MELI) and Sea Limited (
SE) are two highly correlated stocks in the same sector (Internet entertainment/e-commerce).
Since SE had a 50% increase in the second half of 2018 (marking the beginning of the market-cap similarities), their correlation began, and SE's large moves (or lack thereof) are highly likely to be precursors to moves from MELI, making it a rare case of a leading indicator unlike most (i.e. RSI and MACD which are lagging indicators).
As these moves take time (usually about 3-6 weeks), these plays are for multi-week/month traders who seek consistent returns. I've annotated the correlation plays within the last two years which should serve as a framework for anyone seeking to take advantage of these opportunities in the future.
TL;DR: SE and MELI are highly correlated, and, as annotated in the analysis, SE is a leading indicator for MELI generally speaking. The areas of big moves by SE are usually precursors for big moves by MELI, and areas of consolidation by SE are usually indicators that MELI's big moves will reverse. Ideal time frame: 2-6 weeks per trade.
As always, do your own due-diligence, never risk too much per trade, have your own plans and targets, and be responsible.
Chart image without volume:
MELI) and Sea Limited (SE) are two highly correlated stocks in the same sector (Internet entertainment/e-commerce). Since SE had a 50% increase in the second half of 2018 (marking the beginning of the market-cap similarities), their correlation began, and SE's large moves (or lack thereof) are highly likely to be precursors to moves from MELI, making it a rare case of a leading indicator unlike most (i.e. RSI and MACD which are lagging indicators).
As these moves take time (usually about 3-6 weeks), these plays are for multi-week/month traders who seek consistent returns. I've annotated the correlation plays within the last two years which should serve as a framework for anyone seeking to take advantage of these opportunities in the future.
TL;DR: SE and MELI are highly correlated, and, as annotated in the analysis, SE is a leading indicator for MELI generally speaking. The areas of big moves by SE are usually precursors for big moves by MELI, and areas of consolidation by SE are usually indicators that MELI's big moves will reverse. Ideal time frame: 2-6 weeks per trade.
As always, do your own due-diligence, never risk too much per trade, have your own plans and targets, and be responsible.
Chart image without volume:
Nota
The times when SE doesn't act as a precursor to MELI despite having a big move are when the move happens on the same day to both stocks, meaning both stocks move up or down at a greater than average rate. This strengthens the case for the correlation, and because they move so tightly together, days when SE moves while MELI remains flat (or near flat in consolidation) are reliable as serving to inform the future movement of MELI.
Please note that MELI is unlikely to inform the future movement of SE. The correlation is tight, but the moves are largely determined by the activity of SE.
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