Correlation Between SBM OFFSHORE and Internet Thailand
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Internet Thailand 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 Internet Thailand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Internet Thailand PCL, you can compare the effects of market volatilities on SBM OFFSHORE and Internet Thailand 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 Internet Thailand. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Internet Thailand.
Diversification Opportunities for SBM OFFSHORE and Internet Thailand
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Internet is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Internet Thailand PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand PCL 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 Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand PCL has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Internet Thailand go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Internet Thailand
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 40.85 times less return on investment than Internet Thailand. But when comparing it to its historical volatility, SBM OFFSHORE is 3.48 times less risky than Internet Thailand. It trades about 0.02 of its potential returns per unit of risk. Internet Thailand PCL is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Internet Thailand PCL on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Internet Thailand PCL or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Internet Thailand PCL
Performance |
| Timeline |
| SBM OFFSHORE |
| Internet Thailand PCL |
SBM OFFSHORE and Internet Thailand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Internet Thailand
The main advantage of trading using opposite SBM OFFSHORE and Internet Thailand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Internet Thailand 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 Internet Thailand will offset losses from the drop in Internet Thailand's long position.| SBM OFFSHORE vs. TOTAL GABON | SBM OFFSHORE vs. Walgreens Boots Alliance | SBM OFFSHORE vs. Banco Santander SA | SBM OFFSHORE vs. Peak Resources Limited |
| Internet Thailand vs. Marie Brizard Wine | Internet Thailand vs. Harmony Gold Mining | Internet Thailand vs. CapitaLand Investment Limited | Internet Thailand vs. MGIC INVESTMENT |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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