Correlation Between SBM Offshore and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Zegona 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 Zegona 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 Zegona Communications Plc, you can compare the effects of market volatilities on SBM Offshore and Zegona 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Zegona Communications.
Diversification Opportunities for SBM Offshore and Zegona Communications
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SBM and Zegona is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of SBM Offshore i.e., SBM Offshore and Zegona Communications go up and down completely randomly.
Pair Corralation between SBM Offshore and Zegona Communications
Assuming the 90 days trading horizon SBM Offshore is expected to generate 2.23 times less return on investment than Zegona Communications. But when comparing it to its historical volatility, SBM Offshore NV is 1.63 times less risky than Zegona Communications. It trades about 0.14 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 42,400 in Zegona Communications Plc on November 4, 2024 and sell it today you would earn a total of 4,600 from holding Zegona Communications Plc or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
SBM Offshore NV vs. Zegona Communications Plc
Performance |
| Timeline |
| SBM Offshore NV |
| Zegona Communications Plc |
SBM Offshore and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Zegona Communications
The main advantage of trading using opposite SBM Offshore and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Zegona 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 Zegona Communications will offset losses from the drop in Zegona 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 |
| Zegona Communications vs. Eastman Chemical Co | Zegona Communications vs. CAP LEASE AVIATION | Zegona Communications vs. First Majestic Silver | Zegona Communications vs. STMicroelectronics NV |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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