Correlation Between Mineral Financial and SBM Offshore

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

By analyzing existing cross correlation between Mineral Financial Investments and SBM Offshore NV, you can compare the effects of market volatilities on Mineral Financial and SBM Offshore 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 Mineral Financial with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mineral Financial and SBM Offshore.

Diversification Opportunities for Mineral Financial and SBM Offshore

0.06

Correlation Coefficient

Mineral Financial  SBM Offshore

Significant diversification

The 3 months correlation between Mineral and SBM is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mineral Financial Investments and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Mineral Financial 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 Mineral Financial Investments are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Mineral Financial i.e., Mineral Financial and SBM Offshore go up and down completely randomly.

Pair Corralation between Mineral Financial and SBM Offshore

Assuming the 90 days trading horizon Mineral Financial is expected to generate 3.22 times less return on investment than SBM Offshore. In addition to that, Mineral Financial is 1.87 times more volatile than SBM Offshore NV. It trades about 0.01 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.05 per unit of volatility. If you would invest  1,259  in SBM Offshore NV on October 24, 2024 and sell it today you would earn a total of  544.00  from holding SBM Offshore NV or generate 43.21% return on investment over 90 days.

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

Mineral Financial Investments  vs.  SBM Offshore NV

Mineral Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mineral Financial Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mineral Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

SBM Offshore NV

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, SBM Offshore may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mineral Financial and SBM Offshore

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

The idea behind Mineral Financial Investments and SBM Offshore NV 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.