Correlation Between SBM Offshore and Light Science
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Light Science 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 Light Science 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 Light Science Technologies, you can compare the effects of market volatilities on SBM Offshore and Light Science 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 Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Light Science.
Diversification Opportunities for SBM Offshore and Light Science
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Light is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of SBM Offshore i.e., SBM Offshore and Light Science go up and down completely randomly.
Pair Corralation between SBM Offshore and Light Science
Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.63 times more return on investment than Light Science. However, SBM Offshore NV is 1.58 times less risky than Light Science. It trades about 0.1 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.23 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 | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
SBM Offshore NV vs. Light Science Technologies
Performance |
| Timeline |
| SBM Offshore NV |
| Light Science Techno |
SBM Offshore and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Light Science
The main advantage of trading using opposite SBM Offshore and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science'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 |
| Light Science vs. Teradata Corp | Light Science vs. Eastinco Mining Exploration | Light Science vs. McEwen Mining | Light Science vs. GoldMining |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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