Correlation Between Sabre Corpo and Seadrill

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

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

Diversification Opportunities for Sabre Corpo and Seadrill

-0.12

Correlation Coefficient

Sabre Corpo  Seadrill

Good diversification

The 3 months correlation between Sabre and Seadrill is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corpo and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited and Sabre Corpo 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 Sabre Corpo are associated (or correlated) with Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Sabre Corpo i.e., Sabre Corpo and Seadrill go up and down completely randomly.

Pair Corralation between Sabre Corpo and Seadrill

Given the investment horizon of 90 days Sabre Corpo is expected to generate 1.92 times more return on investment than Seadrill. However, Sabre Corpo is 1.92 times more volatile than Seadrill Limited. It trades about -0.08 of its potential returns per unit of risk. Seadrill Limited is currently generating about -0.28 per unit of risk. If you would invest  391.00  in Sabre Corpo on September 29, 2024 and sell it today you would lose (24.00) from holding Sabre Corpo or give up 6.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Sabre Corpo  vs.  Seadrill Limited

Sabre Corpo

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Sabre Corpo is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Seadrill Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sabre Corpo and Seadrill

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

The idea behind Sabre Corpo and Seadrill Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.