Correlation Between SBM OFFSHORE and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and REVO INSURANCE 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 REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and REVO INSURANCE SPA, you can compare the effects of market volatilities on SBM OFFSHORE and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and REVO INSURANCE.
Diversification Opportunities for SBM OFFSHORE and REVO INSURANCE
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and REVO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and REVO INSURANCE go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and REVO INSURANCE
Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the REVO INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, SBM OFFSHORE is 1.33 times less risky than REVO INSURANCE. The stock trades about -0.01 of its potential returns per unit of risk. The REVO INSURANCE SPA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 906.00 in REVO INSURANCE SPA on October 6, 2024 and sell it today you would earn a total of 394.00 from holding REVO INSURANCE SPA or generate 43.49% 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. REVO INSURANCE SPA
Performance |
Timeline |
SBM OFFSHORE |
REVO INSURANCE SPA |
SBM OFFSHORE and REVO INSURANCE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SBM OFFSHORE and REVO INSURANCE
The main advantage of trading using opposite SBM OFFSHORE and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.SBM OFFSHORE vs. HAVERTY FURNITURE A | SBM OFFSHORE vs. HomeToGo SE | SBM OFFSHORE vs. Focus Home Interactive | SBM OFFSHORE vs. Chunghwa Telecom Co |
REVO INSURANCE vs. The Travelers Companies | REVO INSURANCE vs. Jardine Matheson Holdings | REVO INSURANCE vs. DELCATH SYS NEW | REVO INSURANCE vs. Japan Post Insurance |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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