Correlation Between SBM Offshore and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Gamma Communications 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 Gamma Communications 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 Gamma Communications PLC, you can compare the effects of market volatilities on SBM Offshore and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Gamma Communications.
Diversification Opportunities for SBM Offshore and Gamma Communications
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Gamma is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of SBM Offshore i.e., SBM Offshore and Gamma Communications go up and down completely randomly.
Pair Corralation between SBM Offshore and Gamma Communications
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.93 times more return on investment than Gamma Communications. However, SBM Offshore NV is 1.07 times less risky than Gamma Communications. It trades about 0.14 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.31 per unit of risk. If you would invest 1,717 in SBM Offshore NV on November 4, 2024 and sell it today you would earn a total of 71.00 from holding SBM Offshore NV or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
SBM Offshore NV vs. Gamma Communications PLC
Performance |
| Timeline |
| SBM Offshore NV |
| Gamma Communications PLC |
SBM Offshore and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Gamma Communications
The main advantage of trading using opposite SBM Offshore and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| SBM Offshore vs. Gamma Communications PLC | SBM Offshore vs. Universal Music Group | SBM Offshore vs. Clean Power Hydrogen | SBM Offshore vs. Aeorema Communications 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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