Correlation Between SBM Offshore and 37940XAN2

Can any of the company-specific risk be diversified away by investing in both SBM Offshore and 37940XAN2 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 37940XAN2 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 GPN 53 15 AUG 29, you can compare the effects of market volatilities on SBM Offshore and 37940XAN2 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 37940XAN2. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and 37940XAN2.

Diversification Opportunities for SBM Offshore and 37940XAN2

0.36

Correlation Coefficient

SBM Offshore  37940XAN2

Weak diversification

The 3 months correlation between SBM and 37940XAN2 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and GPN 53 15 AUG 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPN 53 15 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 37940XAN2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPN 53 15 has no effect on the direction of SBM Offshore i.e., SBM Offshore and 37940XAN2 go up and down completely randomly.

Pair Corralation between SBM Offshore and 37940XAN2

Assuming the 90 days horizon SBM Offshore NV is expected to generate 33.6 times more return on investment than 37940XAN2. However, SBM Offshore is 33.6 times more volatile than GPN 53 15 AUG 29. It trades about 0.22 of its potential returns per unit of risk. GPN 53 15 AUG 29 is currently generating about 0.33 per unit of risk. If you would invest  1,790  in SBM Offshore NV on December 4, 2024 and sell it today you would earn a total of  485.00  from holding SBM Offshore NV or generate 27.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

SBM Offshore NV  vs.  GPN 53 15 AUG 29

SBM Offshore NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, SBM Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

GPN 53 15

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GPN 53 15 AUG 29 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 37940XAN2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SBM Offshore and 37940XAN2

The main advantage of trading using opposite SBM Offshore and 37940XAN2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, 37940XAN2 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 37940XAN2 will offset losses from the drop in 37940XAN2's long position.

The idea behind SBM Offshore NV and GPN 53 15 AUG 29 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.