Correlation Between Sapiens International and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Sapiens International 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 Sapiens International and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapiens International and SBM Offshore NV, you can compare the effects of market volatilities on Sapiens International 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 Sapiens International with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and SBM Offshore.
Diversification Opportunities for Sapiens International and SBM Offshore
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sapiens and SBM is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International 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 Sapiens International 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 Sapiens International 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 Sapiens International i.e., Sapiens International and SBM Offshore go up and down completely randomly.
Pair Corralation between Sapiens International and SBM Offshore
Given the investment horizon of 90 days Sapiens International is expected to generate 1.3 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, Sapiens International is 2.28 times less risky than SBM Offshore. It trades about 0.05 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,577 in SBM Offshore NV on September 23, 2024 and sell it today you would earn a total of 123.00 from holding SBM Offshore NV or generate 7.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 72.43% |
Values | Daily Returns |
Sapiens International vs. SBM Offshore NV
Performance |
Timeline |
Sapiens International |
SBM Offshore NV |
Sapiens International and SBM Offshore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sapiens International and SBM Offshore
The main advantage of trading using opposite Sapiens International and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International 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.Sapiens International vs. Dubber Limited | Sapiens International vs. Advanced Health Intelligence | Sapiens International vs. Danavation Technologies Corp | Sapiens International vs. BASE Inc |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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