Correlation Between Retail Estates and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and SBM OFFSHORE, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and SBM OFFSHORE.
Diversification Opportunities for Retail Estates and SBM OFFSHORE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Retail and SBM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Retail Estates 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 Retail Estates 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 has no effect on the direction of Retail Estates i.e., Retail Estates and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Retail Estates and SBM OFFSHORE
Assuming the 90 days horizon Retail Estates is expected to generate 21.96 times less return on investment than SBM OFFSHORE. But when comparing it to its historical volatility, Retail Estates NV is 1.78 times less risky than SBM OFFSHORE. It trades about 0.01 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,678 in SBM OFFSHORE on December 28, 2024 and sell it today you would earn a total of 334.00 from holding SBM OFFSHORE or generate 19.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Retail Estates NV vs. SBM OFFSHORE
Performance |
Timeline |
Retail Estates NV |
SBM OFFSHORE |
Retail Estates and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Retail Estates and SBM OFFSHORE
The main advantage of trading using opposite Retail Estates and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.Retail Estates vs. Japan Post Insurance | Retail Estates vs. Vienna Insurance Group | Retail Estates vs. SCANSOURCE | Retail Estates vs. QBE Insurance Group |
SBM OFFSHORE vs. United Microelectronics Corp | SBM OFFSHORE vs. MOUNT GIBSON IRON | SBM OFFSHORE vs. Hana Microelectronics PCL | SBM OFFSHORE vs. Samsung Electronics Co |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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