Correlation Between SBM OFFSHORE and Grand City
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Grand City 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 Grand City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Grand City Properties, you can compare the effects of market volatilities on SBM OFFSHORE and Grand City 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 Grand City. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Grand City.
Diversification Opportunities for SBM OFFSHORE and Grand City
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBM and Grand is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Grand City Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand City Properties 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 Grand City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand City Properties has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Grand City go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Grand City
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.32 times less return on investment than Grand City. But when comparing it to its historical volatility, SBM OFFSHORE is 1.5 times less risky than Grand City. It trades about 0.04 of its potential returns per unit of risk. Grand City Properties is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 959.00 in Grand City Properties on August 30, 2024 and sell it today you would earn a total of 282.00 from holding Grand City Properties or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Grand City Properties
Performance |
| Timeline |
| SBM OFFSHORE |
| Grand City Properties |
SBM OFFSHORE and Grand City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Grand City
The main advantage of trading using opposite SBM OFFSHORE and Grand City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Grand City 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 Grand City will offset losses from the drop in Grand City's long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Superior Plus Corp | SBM OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
| Grand City vs. CAREER EDUCATION | Grand City vs. DEVRY EDUCATION GRP | Grand City vs. Vastned Retail NV | Grand City vs. Marie Brizard Wine |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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