Correlation Between Prosafe SE and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Prosafe SE 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 Prosafe SE and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and SBM OFFSHORE, you can compare the effects of market volatilities on Prosafe SE 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 Prosafe SE with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and SBM OFFSHORE.
Diversification Opportunities for Prosafe SE and SBM OFFSHORE
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prosafe and SBM is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Prosafe SE 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 Prosafe SE 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 has no effect on the direction of Prosafe SE i.e., Prosafe SE and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Prosafe SE and SBM OFFSHORE
Assuming the 90 days horizon Prosafe SE is expected to under-perform the SBM OFFSHORE. In addition to that, Prosafe SE is 2.36 times more volatile than SBM OFFSHORE. It trades about -0.3 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.08 per unit of volatility. If you would invest 1,428 in SBM OFFSHORE on September 5, 2024 and sell it today you would earn a total of 248.00 from holding SBM OFFSHORE or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. SBM OFFSHORE
Performance |
| Timeline |
| Prosafe SE |
| SBM OFFSHORE |
Prosafe SE and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and SBM OFFSHORE
The main advantage of trading using opposite Prosafe SE and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE 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.| Prosafe SE vs. SBM OFFSHORE | Prosafe SE vs. Diamyd Medical AB | Prosafe SE vs. Clean Energy Fuels | Prosafe SE vs. Cleanaway Waste Management |
| SBM OFFSHORE vs. TOTAL GABON | SBM OFFSHORE vs. Walgreens Boots Alliance | SBM OFFSHORE vs. Peak Resources Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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