Correlation Between SBM Offshore and Universal Display
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Universal Display 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 Universal Display 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 Universal Display Corp, you can compare the effects of market volatilities on SBM Offshore and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Universal Display.
Diversification Opportunities for SBM Offshore and Universal Display
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Universal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display Corp 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of SBM Offshore i.e., SBM Offshore and Universal Display go up and down completely randomly.
Pair Corralation between SBM Offshore and Universal Display
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.7 times more return on investment than Universal Display. However, SBM Offshore NV is 1.42 times less risky than Universal Display. It trades about 0.1 of its potential returns per unit of risk. Universal Display Corp is currently generating about 0.03 per unit of risk. If you would invest 1,736 in SBM Offshore NV on November 2, 2024 and sell it today you would earn a total of 52.00 from holding SBM Offshore NV or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Universal Display Corp
Performance |
| Timeline |
| SBM Offshore NV |
| Universal Display Corp |
SBM Offshore and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Universal Display
The main advantage of trading using opposite SBM Offshore and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| SBM Offshore vs. Ecclesiastical Insurance Office | SBM Offshore vs. bet at home AG | SBM Offshore vs. Silver Bullet Data | SBM Offshore vs. Anglo Asian Mining |
| Universal Display vs. BlackRock Frontiers Investment | Universal Display vs. JB Hunt Transport | Universal Display vs. Bankers Investment Trust | Universal Display vs. Ecclesiastical Insurance Office |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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