Correlation Between SBM OFFSHORE and CREO MEDICAL
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and CREO MEDICAL 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 SBM OFFSHORE and CREO MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and CREO MEDICAL GRP, you can compare the effects of market volatilities on SBM OFFSHORE and CREO MEDICAL 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 SBM OFFSHORE with a short position of CREO MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and CREO MEDICAL.
Diversification Opportunities for SBM OFFSHORE and CREO MEDICAL
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between SBM and CREO is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and CREO MEDICAL GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREO MEDICAL GRP and SBM OFFSHORE 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 SBM OFFSHORE are associated (or correlated) with CREO MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREO MEDICAL GRP has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and CREO MEDICAL go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and CREO MEDICAL
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 17.0 times less return on investment than CREO MEDICAL. But when comparing it to its historical volatility, SBM OFFSHORE is 6.19 times less risky than CREO MEDICAL. It trades about 0.12 of its potential returns per unit of risk. CREO MEDICAL GRP is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 16.00 in CREO MEDICAL GRP on October 11, 2024 and sell it today you would earn a total of 6.00 from holding CREO MEDICAL GRP or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. CREO MEDICAL GRP
Performance |
| Timeline |
| SBM OFFSHORE |
| CREO MEDICAL GRP |
SBM OFFSHORE and CREO MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and CREO MEDICAL
The main advantage of trading using opposite SBM OFFSHORE and CREO MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, CREO MEDICAL 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 CREO MEDICAL will offset losses from the drop in CREO MEDICAL's long position.| SBM OFFSHORE vs. NIGHTINGALE HEALTH EO | SBM OFFSHORE vs. Zoom Video Communications | SBM OFFSHORE vs. Singapore Telecommunications Limited | SBM OFFSHORE vs. CARDINAL HEALTH |
| CREO MEDICAL vs. Yanzhou Coal Mining | CREO MEDICAL vs. DATA MODUL | CREO MEDICAL vs. DATAGROUP SE | CREO MEDICAL vs. Linedata Services SA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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