Correlation Between Scandic Hotels and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and SBM Offshore 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 Scandic Hotels and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and SBM Offshore NV, you can compare the effects of market volatilities on Scandic Hotels and SBM Offshore 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 Scandic Hotels with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and SBM Offshore.
Diversification Opportunities for Scandic Hotels and SBM Offshore
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandic and SBM is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and SBM Offshore go up and down completely randomly.
Pair Corralation between Scandic Hotels and SBM Offshore
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 1.1 times more return on investment than SBM Offshore. However, Scandic Hotels is 1.1 times more volatile than SBM Offshore NV. It trades about 0.08 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.05 per unit of risk. If you would invest 3,453 in Scandic Hotels Group on September 3, 2024 and sell it today you would earn a total of 3,269 from holding Scandic Hotels Group or generate 94.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Scandic Hotels Group vs. SBM Offshore NV
Performance |
| Timeline |
| Scandic Hotels Group |
| SBM Offshore NV |
Scandic Hotels and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and SBM Offshore
The main advantage of trading using opposite Scandic Hotels and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Scandic Hotels vs. Sealed Air Corp | Scandic Hotels vs. Alaska Air Group | Scandic Hotels vs. Charter Communications Cl | Scandic Hotels vs. Zegona Communications Plc |
| SBM Offshore vs. Zoom Video Communications | SBM Offshore vs. Enbridge | SBM Offshore vs. Endo International PLC | SBM Offshore vs. Invesco Health Care |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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