Correlation Between SBM OFFSHORE and Apollo Investment
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Apollo Investment 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 Apollo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Apollo Investment Corp, you can compare the effects of market volatilities on SBM OFFSHORE and Apollo Investment 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 Apollo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Apollo Investment.
Diversification Opportunities for SBM OFFSHORE and Apollo Investment
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Apollo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp 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 Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Apollo Investment go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Apollo Investment
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.49 times more return on investment than Apollo Investment. However, SBM OFFSHORE is 1.49 times more volatile than Apollo Investment Corp. It trades about 0.09 of its potential returns per unit of risk. Apollo Investment Corp is currently generating about -0.01 per unit of risk. If you would invest 1,391 in SBM OFFSHORE on September 3, 2024 and sell it today you would earn a total of 305.00 from holding SBM OFFSHORE or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Apollo Investment Corp
Performance |
| Timeline |
| SBM OFFSHORE |
| Apollo Investment Corp |
SBM OFFSHORE and Apollo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Apollo Investment
The main advantage of trading using opposite SBM OFFSHORE and Apollo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Apollo Investment 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 Apollo Investment will offset losses from the drop in Apollo Investment's long position.| SBM OFFSHORE vs. TOTAL GABON | SBM OFFSHORE vs. Walgreens Boots Alliance | SBM OFFSHORE vs. Peak Resources Limited |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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