Correlation Between Apple and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SBM OFFSHORE, you can compare the effects of market volatilities on Apple 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 Apple with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SBM OFFSHORE.
Diversification Opportunities for Apple and SBM OFFSHORE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and SBM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Apple 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 Apple Inc 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 Apple i.e., Apple and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Apple and SBM OFFSHORE
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.75 times more return on investment than SBM OFFSHORE. However, Apple Inc is 1.34 times less risky than SBM OFFSHORE. It trades about 0.11 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.06 per unit of risk. If you would invest 21,489 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 736.00 from holding Apple Inc or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SBM OFFSHORE
Performance |
| Timeline |
| Apple Inc |
| SBM OFFSHORE |
Apple and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SBM OFFSHORE
The main advantage of trading using opposite Apple and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Cellnex Telecom SA | Apple vs. Spirent Communications plc | Apple vs. Ribbon Communications | Apple vs. Perseus Mining Limited |
| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Superior Plus Corp | SBM OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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