Correlation Between 84859DAA5 and SBM Offshore

Can any of the company-specific risk be diversified away by investing in both 84859DAA5 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 84859DAA5 and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SR 33 01 JUN 51 and SBM Offshore NV, you can compare the effects of market volatilities on 84859DAA5 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 84859DAA5 with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of 84859DAA5 and SBM Offshore.

Diversification Opportunities for 84859DAA5 and SBM Offshore

-0.32

Correlation Coefficient

84859DAA5  SBM Offshore

Very good diversification

The 3 months correlation between 84859DAA5 and SBM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SR 33 01 JUN 51 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 84859DAA5 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 SR 33 01 JUN 51 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 84859DAA5 i.e., 84859DAA5 and SBM Offshore go up and down completely randomly.

Pair Corralation between 84859DAA5 and SBM Offshore

Assuming the 90 days trading horizon 84859DAA5 is expected to generate 1.0 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, SR 33 01 JUN 51 is 3.76 times less risky than SBM Offshore. It trades about 0.84 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.22 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

SR 33 01 JUN 51  vs.  SBM Offshore NV

84859DAA5

Risk-Adjusted Performance

Very Weak

Over the last 90 days SR 33 01 JUN 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SR 33 01 JUN 51 investors.

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.

Pair Trading with 84859DAA5 and SBM Offshore

The main advantage of trading using opposite 84859DAA5 and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 84859DAA5 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 SR 33 01 JUN 51 and SBM Offshore NV 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.