Correlation Between Corning Incorporated and SBM Offshore

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

By analyzing existing cross correlation between Corning Incorporated and SBM Offshore NV, you can compare the effects of market volatilities on Corning Incorporated and SBM Offshore 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 Corning Incorporated with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corning Incorporated and SBM Offshore.

Diversification Opportunities for Corning Incorporated and SBM Offshore

-0.27

Correlation Coefficient

Corning Incorporated  SBM Offshore

Very good diversification

The 3 months correlation between Corning and SBM is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Corning Incorporated 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 Corning Incorporated are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Corning Incorporated i.e., Corning Incorporated and SBM Offshore go up and down completely randomly.

Pair Corralation between Corning Incorporated and SBM Offshore

Considering the 90-day investment horizon Corning Incorporated is expected to generate 12.17 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, Corning Incorporated is 1.65 times less risky than SBM Offshore. It trades about 0.02 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,700  in SBM Offshore NV on December 18, 2024 and sell it today you would earn a total of  585.00  from holding SBM Offshore NV or generate 34.41% return on investment over 90 days.

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

Corning Incorporated  vs.  SBM Offshore NV

Corning Incorporated

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Corning Incorporated is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SBM Offshore NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, SBM Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corning Incorporated and SBM Offshore

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

The idea behind Corning Incorporated and SBM Offshore NV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.