Correlation Between Apollo Investment and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Apollo Investment 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 Apollo Investment and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Investment Corp and SBM OFFSHORE, you can compare the effects of market volatilities on Apollo Investment 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 Apollo Investment with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and SBM OFFSHORE.
Diversification Opportunities for Apollo Investment and SBM OFFSHORE
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apollo and SBM is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Apollo Investment 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 Apollo Investment Corp 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 Apollo Investment i.e., Apollo Investment and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Apollo Investment and SBM OFFSHORE
Assuming the 90 days trading horizon Apollo Investment Corp is expected to generate 0.83 times more return on investment than SBM OFFSHORE. However, Apollo Investment Corp is 1.21 times less risky than SBM OFFSHORE. It trades about 0.07 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.05 per unit of risk. If you would invest 899.00 in Apollo Investment Corp on September 3, 2024 and sell it today you would earn a total of 443.00 from holding Apollo Investment Corp or generate 49.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Investment Corp vs. SBM OFFSHORE
Performance |
| Timeline |
| Apollo Investment Corp |
| SBM OFFSHORE |
Apollo Investment and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and SBM OFFSHORE
The main advantage of trading using opposite Apollo Investment and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment 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.| Apollo Investment vs. Morgan Stanley | Apollo Investment vs. The Goldman Sachs | Apollo Investment vs. The Goldman Sachs | Apollo Investment vs. Superior Plus Corp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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