Correlation Between SBM OFFSHORE and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and AOYAMA TRADING 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 AOYAMA TRADING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and AOYAMA TRADING, you can compare the effects of market volatilities on SBM OFFSHORE and AOYAMA TRADING 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 AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and AOYAMA TRADING.
Diversification Opportunities for SBM OFFSHORE and AOYAMA TRADING
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and AOYAMA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and AOYAMA TRADING
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 2.58 times less return on investment than AOYAMA TRADING. But when comparing it to its historical volatility, SBM OFFSHORE is 2.05 times less risky than AOYAMA TRADING. It trades about 0.09 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 870.00 in AOYAMA TRADING on September 3, 2024 and sell it today you would earn a total of 540.00 from holding AOYAMA TRADING or generate 62.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. AOYAMA TRADING
Performance |
| Timeline |
| SBM OFFSHORE |
| AOYAMA TRADING |
SBM OFFSHORE and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and AOYAMA TRADING
The main advantage of trading using opposite SBM OFFSHORE and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| SBM OFFSHORE vs. TOTAL GABON | SBM OFFSHORE vs. Walgreens Boots Alliance | SBM OFFSHORE vs. Peak Resources Limited |
| AOYAMA TRADING vs. CVW CLEANTECH INC | AOYAMA TRADING vs. Brockhaus Capital Management | AOYAMA TRADING vs. SOFI TECHNOLOGIES | AOYAMA TRADING vs. Cardinal Health |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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