Correlation Between Capricorn Energy and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Capricorn Energy 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 Capricorn Energy and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricorn Energy PLC and SBM Offshore NV, you can compare the effects of market volatilities on Capricorn Energy 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 Capricorn Energy with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and SBM Offshore.
Diversification Opportunities for Capricorn Energy and SBM Offshore
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Capricorn and SBM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy 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 Capricorn Energy 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 Capricorn Energy 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 Capricorn Energy i.e., Capricorn Energy and SBM Offshore go up and down completely randomly.
Pair Corralation between Capricorn Energy and SBM Offshore
Assuming the 90 days trading horizon Capricorn Energy PLC is expected to generate 1.18 times more return on investment than SBM Offshore. However, Capricorn Energy is 1.18 times more volatile than SBM Offshore NV. It trades about 0.16 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.18 per unit of risk. If you would invest 29,300 in Capricorn Energy PLC on November 1, 2024 and sell it today you would earn a total of 2,100 from holding Capricorn Energy PLC or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capricorn Energy PLC vs. SBM Offshore NV
Performance |
| Timeline |
| Capricorn Energy PLC |
| SBM Offshore NV |
Capricorn Energy and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Energy and SBM Offshore
The main advantage of trading using opposite Capricorn Energy and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn Energy 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.| Capricorn Energy vs. SBM Offshore NV | Capricorn Energy vs. Cairo Communication SpA | Capricorn Energy vs. United States Steel | Capricorn Energy vs. BW Offshore |
| SBM Offshore vs. Geely Automobile Holdings | SBM Offshore vs. Coeur Mining | SBM Offshore vs. Fulcrum Metals PLC | SBM Offshore vs. Charter Communications Cl |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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