Correlation Between SBM OFFSHORE and FEMALE HEALTH

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

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

Diversification Opportunities for SBM OFFSHORE and FEMALE HEALTH

-0.44

Correlation Coefficient

SBM OFFSHORE  FEMALE HEALTH

Very good diversification

The 3 months correlation between SBM and FEMALE is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and FEMALE HEALTH

Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the FEMALE HEALTH. But the stock apears to be less risky and, when comparing its historical volatility, SBM OFFSHORE is 3.51 times less risky than FEMALE HEALTH. The stock trades about -0.23 of its potential returns per unit of risk. The FEMALE HEALTH is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  64.00  in FEMALE HEALTH on September 24, 2024 and sell it today you would lose (5.00) from holding FEMALE HEALTH or give up 7.81% of portfolio value over 90 days.

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

SBM OFFSHORE  vs.  FEMALE HEALTH

SBM OFFSHORE

Risk-Adjusted Performance

1 of 100

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.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SBM OFFSHORE and FEMALE HEALTH

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

The idea behind SBM OFFSHORE and FEMALE HEALTH 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.