Correlation Between Addtech AB and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Addtech AB 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 Addtech AB and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and SBM OFFSHORE, you can compare the effects of market volatilities on Addtech AB 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 Addtech AB with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and SBM OFFSHORE.
Diversification Opportunities for Addtech AB and SBM OFFSHORE
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addtech and SBM is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Addtech AB 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 Addtech AB 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 Addtech AB i.e., Addtech AB and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Addtech AB and SBM OFFSHORE
Assuming the 90 days trading horizon Addtech AB is expected to under-perform the SBM OFFSHORE. In addition to that, Addtech AB is 1.12 times more volatile than SBM OFFSHORE. It trades about -0.09 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.36 per unit of volatility. If you would invest 1,645 in SBM OFFSHORE on October 20, 2024 and sell it today you would earn a total of 160.00 from holding SBM OFFSHORE or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. SBM OFFSHORE
Performance |
| Timeline |
| Addtech AB |
| SBM OFFSHORE |
Addtech AB and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and SBM OFFSHORE
The main advantage of trading using opposite Addtech AB and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB 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.| Addtech AB vs. GigaMedia | Addtech AB vs. Harmony Gold Mining | Addtech AB vs. Cars Inc | Addtech AB vs. Perseus Mining Limited |
| SBM OFFSHORE vs. BORR DRILLING NEW | SBM OFFSHORE vs. GLG LIFE TECH | SBM OFFSHORE vs. Bio Techne Corp | SBM OFFSHORE vs. Addtech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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