Correlation Between HomeToGo and SBM OFFSHORE

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

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

Diversification Opportunities for HomeToGo and SBM OFFSHORE

-0.67

Correlation Coefficient

HomeToGo  SBM OFFSHORE

Excellent diversification

The 3 months correlation between HomeToGo and SBM is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and HomeToGo 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 HomeToGo SE 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 has no effect on the direction of HomeToGo i.e., HomeToGo and SBM OFFSHORE go up and down completely randomly.

Pair Corralation between HomeToGo and SBM OFFSHORE

Assuming the 90 days trading horizon HomeToGo SE is expected to under-perform the SBM OFFSHORE. In addition to that, HomeToGo is 1.26 times more volatile than SBM OFFSHORE. It trades about -0.06 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.17 per unit of volatility. If you would invest  1,665  in SBM OFFSHORE on December 24, 2024 and sell it today you would earn a total of  347.00  from holding SBM OFFSHORE or generate 20.84% return on investment over 90 days.

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

HomeToGo SE  vs.  SBM OFFSHORE

HomeToGo SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SBM OFFSHORE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SBM OFFSHORE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HomeToGo and SBM OFFSHORE

The main advantage of trading using opposite HomeToGo and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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 HomeToGo SE and SBM OFFSHORE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.