Correlation Between SBM OFFSHORE and PLAYWAY SA

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

By analyzing existing cross correlation between SBM OFFSHORE and PLAYWAY SA ZY 10, you can compare the effects of market volatilities on SBM OFFSHORE and PLAYWAY SA 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 PLAYWAY SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and PLAYWAY SA.

Diversification Opportunities for SBM OFFSHORE and PLAYWAY SA

0.58

Correlation Coefficient

SBM OFFSHORE  PLAYWAY SA

Very weak diversification

The 3 months correlation between SBM and PLAYWAY is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and PLAYWAY SA ZY 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWAY SA ZY 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 PLAYWAY SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWAY SA ZY has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and PLAYWAY SA go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and PLAYWAY SA

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.27 times less return on investment than PLAYWAY SA. But when comparing it to its historical volatility, SBM OFFSHORE is 1.15 times less risky than PLAYWAY SA. It trades about 0.08 of its potential returns per unit of risk. PLAYWAY SA ZY 10 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,270  in PLAYWAY SA ZY 10 on October 26, 2024 and sell it today you would earn a total of  570.00  from holding PLAYWAY SA ZY 10 or generate 9.09% return on investment over 90 days.

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

SBM OFFSHORE  vs.  PLAYWAY SA ZY 10

SBM OFFSHORE

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SBM OFFSHORE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PLAYWAY SA ZY

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYWAY SA ZY 10 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLAYWAY SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SBM OFFSHORE and PLAYWAY SA

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

The idea behind SBM OFFSHORE and PLAYWAY SA ZY 10 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.