Correlation Between SBM Offshore and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and LPKF Laser 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 LPKF Laser 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 LPKF Laser Electronics, you can compare the effects of market volatilities on SBM Offshore and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and LPKF Laser.
Diversification Opportunities for SBM Offshore and LPKF Laser
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and LPKF is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of SBM Offshore i.e., SBM Offshore and LPKF Laser go up and down completely randomly.
Pair Corralation between SBM Offshore and LPKF Laser
Assuming the 90 days trading horizon SBM Offshore NV is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, SBM Offshore NV is 2.12 times less risky than LPKF Laser. The stock trades about -0.22 of its potential returns per unit of risk. The LPKF Laser Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 851.00 in LPKF Laser Electronics on September 18, 2024 and sell it today you would earn a total of 17.00 from holding LPKF Laser Electronics or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. LPKF Laser Electronics
Performance |
| Timeline |
| SBM Offshore NV |
| LPKF Laser Electronics |
SBM Offshore and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and LPKF Laser
The main advantage of trading using opposite SBM Offshore and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Blue Star Capital |
| LPKF Laser vs. Hollywood Bowl Group | LPKF Laser vs. G5 Entertainment AB | LPKF Laser vs. SBM Offshore NV | LPKF Laser vs. Gaming Realms plc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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