Correlation Between PostNL NV and SBM Offshore

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

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

Diversification Opportunities for PostNL NV and SBM Offshore

-0.43

Correlation Coefficient

PostNL NV  SBM Offshore

Very good diversification

The 3 months correlation between PostNL and SBM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PostNL NV 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 PostNL NV 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 PostNL NV 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 PostNL NV i.e., PostNL NV and SBM Offshore go up and down completely randomly.

Pair Corralation between PostNL NV and SBM Offshore

Assuming the 90 days trading horizon PostNL NV is expected to under-perform the SBM Offshore. In addition to that, PostNL NV is 1.42 times more volatile than SBM Offshore NV. It trades about -0.04 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  1,286  in SBM Offshore NV on October 12, 2024 and sell it today you would earn a total of  436.00  from holding SBM Offshore NV or generate 33.9% return on investment over 90 days.

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

PostNL NV  vs.  SBM Offshore NV

PostNL NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PostNL NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SBM Offshore NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM Offshore NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SBM Offshore 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 PostNL NV and SBM Offshore

The main advantage of trading using opposite PostNL NV and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PostNL NV 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 PostNL NV 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.