Correlation Between Aurora Investment and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Aurora 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 Aurora 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 Aurora Investment Trust and SBM Offshore NV, you can compare the effects of market volatilities on Aurora 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 Aurora Investment with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and SBM Offshore.
Diversification Opportunities for Aurora Investment and SBM Offshore
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aurora and SBM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust 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 Aurora 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 Aurora Investment Trust 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 Aurora Investment i.e., Aurora Investment and SBM Offshore go up and down completely randomly.
Pair Corralation between Aurora Investment and SBM Offshore
Assuming the 90 days trading horizon Aurora Investment Trust is expected to under-perform the SBM Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Aurora Investment Trust is 1.87 times less risky than SBM Offshore. The stock trades about -0.21 of its potential returns per unit of risk. The SBM Offshore NV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,676 in SBM Offshore NV on August 31, 2024 and sell it today you would earn a total of 37.00 from holding SBM Offshore NV or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Investment Trust vs. SBM Offshore NV
Performance |
| Timeline |
| Aurora Investment Trust |
| SBM Offshore NV |
Aurora Investment and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and SBM Offshore
The main advantage of trading using opposite Aurora Investment and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora 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.| Aurora Investment vs. Allianz Technology Trust | Aurora Investment vs. Sabien Technology Group | Aurora Investment vs. Albion Technology General | Aurora Investment vs. CompuGroup Medical AG |
| SBM Offshore vs. AcadeMedia AB | SBM Offshore vs. Zinc Media Group | SBM Offshore vs. Auction Technology Group | SBM Offshore vs. Hollywood Bowl Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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