Correlation Between Gamma Communications and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications PLC and SBM Offshore NV, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and SBM Offshore.
Diversification Opportunities for Gamma Communications and SBM Offshore
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gamma and SBM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications 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 Gamma Communications 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 Gamma Communications 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 Gamma Communications i.e., Gamma Communications and SBM Offshore go up and down completely randomly.
Pair Corralation between Gamma Communications and SBM Offshore
Assuming the 90 days trading horizon Gamma Communications PLC is expected to under-perform the SBM Offshore. In addition to that, Gamma Communications is 1.07 times more volatile than SBM Offshore NV. It trades about -0.31 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.14 per unit of volatility. If you would invest 1,717 in SBM Offshore NV on November 4, 2024 and sell it today you would earn a total of 71.00 from holding SBM Offshore NV or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Gamma Communications PLC vs. SBM Offshore NV
Performance |
| Timeline |
| Gamma Communications PLC |
| SBM Offshore NV |
Gamma Communications and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and SBM Offshore
The main advantage of trading using opposite Gamma Communications and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.The idea behind Gamma Communications PLC and SBM Offshore NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| SBM Offshore vs. Gamma Communications PLC | SBM Offshore vs. Universal Music Group | SBM Offshore vs. Clean Power Hydrogen | SBM Offshore vs. Aeorema Communications Plc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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