Correlation Between SBM OFFSHORE and CTS Eventim

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

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

Diversification Opportunities for SBM OFFSHORE and CTS Eventim

-0.11

Correlation Coefficient

SBM OFFSHORE  CTS Eventim

Good diversification

The 3 months correlation between SBM and CTS is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and CTS Eventim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Eventim AG 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 CTS Eventim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Eventim AG has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and CTS Eventim go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and CTS Eventim

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.65 times more return on investment than CTS Eventim. However, SBM OFFSHORE is 1.53 times less risky than CTS Eventim. It trades about 0.05 of its potential returns per unit of risk. CTS Eventim AG is currently generating about -0.01 per unit of risk. If you would invest  1,604  in SBM OFFSHORE on September 15, 2024 and sell it today you would earn a total of  62.00  from holding SBM OFFSHORE or generate 3.87% 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.  CTS Eventim AG

SBM OFFSHORE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 3 (%) 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.

CTS Eventim AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTS Eventim AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, CTS Eventim is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SBM OFFSHORE and CTS Eventim

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

The idea behind SBM OFFSHORE and CTS Eventim AG 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..