Correlation Between SBM OFFSHORE and UNIVMUSIC GRPADR050

Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and UNIVMUSIC GRPADR050 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 SBM OFFSHORE and UNIVMUSIC GRPADR050 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBM OFFSHORE and UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on SBM OFFSHORE and UNIVMUSIC GRPADR050 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 SBM OFFSHORE with a short position of UNIVMUSIC GRPADR050. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and UNIVMUSIC GRPADR050.

Diversification Opportunities for SBM OFFSHORE and UNIVMUSIC GRPADR050

-0.36

Correlation Coefficient

SBM OFFSHORE  UNIVMUSIC GRPADR050

Very good diversification

The 3 months correlation between SBM and UNIVMUSIC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR050 and SBM OFFSHORE 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 SBM OFFSHORE are associated (or correlated) with UNIVMUSIC GRPADR050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR050 has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and UNIVMUSIC GRPADR050 go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and UNIVMUSIC GRPADR050

Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the UNIVMUSIC GRPADR050. In addition to that, SBM OFFSHORE is 1.27 times more volatile than UNIVMUSIC GRPADR050. It trades about -0.24 of its total potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about 0.33 per unit of volatility. If you would invest  1,110  in UNIVMUSIC GRPADR050 on September 21, 2024 and sell it today you would earn a total of  90.00  from holding UNIVMUSIC GRPADR050 or generate 8.11% return on investment over 90 days.

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

SBM OFFSHORE  vs.  UNIVMUSIC GRPADR050

SBM OFFSHORE

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SBM OFFSHORE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

UNIVMUSIC GRPADR050

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, UNIVMUSIC GRPADR050 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SBM OFFSHORE and UNIVMUSIC GRPADR050

The main advantage of trading using opposite SBM OFFSHORE and UNIVMUSIC GRPADR050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 will offset losses from the drop in UNIVMUSIC GRPADR050's long position.

The idea behind SBM OFFSHORE and UNIVMUSIC GRPADR050 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.