Correlation Between SBM OFFSHORE and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Highlight Communications 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 Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Highlight Communications AG, you can compare the effects of market volatilities on SBM OFFSHORE and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Highlight Communications.
Diversification Opportunities for SBM OFFSHORE and Highlight Communications
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Highlight is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Highlight Communications go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Highlight Communications
Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the Highlight Communications. But the stock apears to be less risky and, when comparing its historical volatility, SBM OFFSHORE is 1.19 times less risky than Highlight Communications. The stock trades about -0.1 of its potential returns per unit of risk. The Highlight Communications AG is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Highlight Communications AG on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Highlight Communications AG or generate 16.16% 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. Highlight Communications AG
Performance |
| Timeline |
| SBM OFFSHORE |
| Highlight Communications |
SBM OFFSHORE and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Highlight Communications
The main advantage of trading using opposite SBM OFFSHORE and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
| Highlight Communications vs. The Walt Disney | Highlight Communications vs. Charter Communications | Highlight Communications vs. Warner Music Group | Highlight Communications vs. Superior Plus Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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