Correlation Between SBM OFFSHORE and CREDIT AGRICOLE

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

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

Diversification Opportunities for SBM OFFSHORE and CREDIT AGRICOLE

-0.29

Correlation Coefficient

SBM OFFSHORE  CREDIT AGRICOLE

Very good diversification

The 3 months correlation between SBM and CREDIT is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and CREDIT AGRICOLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREDIT AGRICOLE 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 CREDIT AGRICOLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREDIT AGRICOLE has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and CREDIT AGRICOLE go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and CREDIT AGRICOLE

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.28 times less return on investment than CREDIT AGRICOLE. In addition to that, SBM OFFSHORE is 1.2 times more volatile than CREDIT AGRICOLE. It trades about 0.04 of its total potential returns per unit of risk. CREDIT AGRICOLE is currently generating about 0.07 per unit of volatility. If you would invest  895.00  in CREDIT AGRICOLE on October 4, 2024 and sell it today you would earn a total of  438.00  from holding CREDIT AGRICOLE or generate 48.94% 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.  CREDIT AGRICOLE

SBM OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM OFFSHORE has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CREDIT AGRICOLE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SBM OFFSHORE and CREDIT AGRICOLE

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

The idea behind SBM OFFSHORE and CREDIT AGRICOLE 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.