Correlation Between SBM OFFSHORE and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Commercial Vehicle 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 Commercial Vehicle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Commercial Vehicle Group, you can compare the effects of market volatilities on SBM OFFSHORE and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Commercial Vehicle.
Diversification Opportunities for SBM OFFSHORE and Commercial Vehicle
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Commercial is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Commercial Vehicle go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Commercial Vehicle
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.52 times more return on investment than Commercial Vehicle. However, SBM OFFSHORE is 1.94 times less risky than Commercial Vehicle. It trades about 0.04 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.05 per unit of risk. If you would invest 1,311 in SBM OFFSHORE on September 12, 2024 and sell it today you would earn a total of 387.00 from holding SBM OFFSHORE or generate 29.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Commercial Vehicle Group
Performance |
| Timeline |
| SBM OFFSHORE |
| Commercial Vehicle |
SBM OFFSHORE and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Commercial Vehicle
The main advantage of trading using opposite SBM OFFSHORE and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
| Commercial Vehicle vs. Reinsurance Group of | Commercial Vehicle vs. SOLSTAD OFFSHORE NK | Commercial Vehicle vs. SBI Insurance Group | Commercial Vehicle vs. SBM OFFSHORE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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