Correlation Between SBM Offshore and SunOpta

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

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

Diversification Opportunities for SBM Offshore and SunOpta

-0.34

Correlation Coefficient

SBM Offshore  SunOpta

Very good diversification

The 3 months correlation between SBM and SunOpta is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 NV are associated (or correlated) with SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of SBM Offshore i.e., SBM Offshore and SunOpta go up and down completely randomly.

Pair Corralation between SBM Offshore and SunOpta

Assuming the 90 days horizon SBM Offshore NV is expected to under-perform the SunOpta. But the pink sheet apears to be less risky and, when comparing its historical volatility, SBM Offshore NV is 1.55 times less risky than SunOpta. The pink sheet trades about -0.05 of its potential returns per unit of risk. The SunOpta is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  598.00  in SunOpta on October 26, 2024 and sell it today you would earn a total of  140.50  from holding SunOpta or generate 23.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

SBM Offshore NV  vs.  SunOpta

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 fairly strong technical and fundamental indicators, SBM Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SunOpta

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBM Offshore and SunOpta

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

The idea behind SBM Offshore NV and SunOpta 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..