Correlation Between Adient PLC and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Adient PLC 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 Adient PLC and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and SBM Offshore NV, you can compare the effects of market volatilities on Adient PLC 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 Adient PLC with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and SBM Offshore.
Diversification Opportunities for Adient PLC and SBM Offshore
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adient and SBM is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC 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 Adient PLC 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 Adient PLC 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 Adient PLC i.e., Adient PLC and SBM Offshore go up and down completely randomly.
Pair Corralation between Adient PLC and SBM Offshore
Given the investment horizon of 90 days Adient PLC is expected to under-perform the SBM Offshore. In addition to that, Adient PLC is 1.33 times more volatile than SBM Offshore NV. It trades about -0.12 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.08 per unit of volatility. If you would invest 1,607 in SBM Offshore NV on September 1, 2024 and sell it today you would earn a total of 273.00 from holding SBM Offshore NV or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. SBM Offshore NV
Performance |
| Timeline |
| Adient PLC |
| SBM Offshore NV |
Adient PLC and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and SBM Offshore
The main advantage of trading using opposite Adient PLC and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC 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.| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc |
| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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