Correlation Between MEDCAW INVESTMENTS and SBM OFFSHORE

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

By analyzing existing cross correlation between MEDCAW INVESTMENTS LS 01 and SBM OFFSHORE, you can compare the effects of market volatilities on MEDCAW INVESTMENTS 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 MEDCAW INVESTMENTS with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDCAW INVESTMENTS and SBM OFFSHORE.

Diversification Opportunities for MEDCAW INVESTMENTS and SBM OFFSHORE

0.0

Correlation Coefficient

MEDCAW INVESTMENTS  SBM OFFSHORE

Pay attention - limited upside

The 3 months correlation between MEDCAW and SBM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MEDCAW INVESTMENTS LS 01 and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and MEDCAW INVESTMENTS 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 MEDCAW INVESTMENTS LS 01 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 MEDCAW INVESTMENTS i.e., MEDCAW INVESTMENTS and SBM OFFSHORE go up and down completely randomly.

Pair Corralation between MEDCAW INVESTMENTS and SBM OFFSHORE

If you would invest  1,665  in SBM OFFSHORE on October 26, 2024 and sell it today you would earn a total of  146.00  from holding SBM OFFSHORE or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

MEDCAW INVESTMENTS LS 01  vs.  SBM OFFSHORE

MEDCAW INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDCAW INVESTMENTS LS 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MEDCAW INVESTMENTS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SBM OFFSHORE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SBM OFFSHORE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MEDCAW INVESTMENTS and SBM OFFSHORE

The main advantage of trading using opposite MEDCAW INVESTMENTS and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDCAW INVESTMENTS 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.

The idea behind MEDCAW INVESTMENTS LS 01 and SBM OFFSHORE 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.