Correlation Between SBM OFFSHORE and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Guangdong 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 Guangdong 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 Guangdong Investment Limited, you can compare the effects of market volatilities on SBM OFFSHORE and Guangdong 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 Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Guangdong Investment.
Diversification Opportunities for SBM OFFSHORE and Guangdong Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SBM and Guangdong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment 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 Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Guangdong Investment go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Guangdong Investment
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.42 times more return on investment than Guangdong Investment. However, SBM OFFSHORE is 2.37 times less risky than Guangdong Investment. It trades about 0.15 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.15 per unit of risk. If you would invest 1,675 in SBM OFFSHORE on November 3, 2024 and sell it today you would earn a total of 89.00 from holding SBM OFFSHORE or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Guangdong Investment Limited
Performance |
| Timeline |
| SBM OFFSHORE |
| Guangdong Investment |
SBM OFFSHORE and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Guangdong Investment
The main advantage of trading using opposite SBM OFFSHORE and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Guangdong 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| SBM OFFSHORE vs. Mitsui Chemicals | SBM OFFSHORE vs. Tencent Music Entertainment | SBM OFFSHORE vs. MAVEN WIRELESS SWEDEN | SBM OFFSHORE vs. Tower One Wireless |
| Guangdong Investment vs. Hollywood Bowl Group | Guangdong Investment vs. Tencent Music Entertainment | Guangdong Investment vs. PROSIEBENSAT1 MEDIADR4 | Guangdong Investment vs. Benchmark Electronics |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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