Correlation Between SBM OFFSHORE and Japan Post
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Japan Post 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 Japan Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Japan Post Bank, you can compare the effects of market volatilities on SBM OFFSHORE and Japan Post 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 Japan Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Japan Post.
Diversification Opportunities for SBM OFFSHORE and Japan Post
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Japan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Japan Post Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Post Bank 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 Japan Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Post Bank has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Japan Post go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Japan Post
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 9.2 times less return on investment than Japan Post. But when comparing it to its historical volatility, SBM OFFSHORE is 1.01 times less risky than Japan Post. It trades about 0.02 of its potential returns per unit of risk. Japan Post Bank is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 810.00 in Japan Post Bank on September 3, 2024 and sell it today you would earn a total of 60.00 from holding Japan Post Bank or generate 7.41% 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. Japan Post Bank
Performance |
| Timeline |
| SBM OFFSHORE |
| Japan Post Bank |
SBM OFFSHORE and Japan Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Japan Post
The main advantage of trading using opposite SBM OFFSHORE and Japan Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Japan Post 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 Japan Post will offset losses from the drop in Japan Post's long position.| SBM OFFSHORE vs. TOTAL GABON | SBM OFFSHORE vs. Walgreens Boots Alliance | SBM OFFSHORE vs. Peak Resources Limited |
| Japan Post vs. YOOMA WELLNESS INC | Japan Post vs. SBM OFFSHORE | Japan Post vs. Diamondrock Hospitality Co | Japan Post vs. EPSILON HEALTHCARE LTD |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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