Correlation Between SBM OFFSHORE and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Lifeway Foods 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 Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Lifeway Foods, you can compare the effects of market volatilities on SBM OFFSHORE and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Lifeway Foods.
Diversification Opportunities for SBM OFFSHORE and Lifeway Foods
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Lifeway is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Lifeway Foods go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Lifeway Foods
Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, SBM OFFSHORE is 2.46 times less risky than Lifeway Foods. The stock trades about -0.06 of its potential returns per unit of risk. The Lifeway Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,120 in Lifeway Foods on October 11, 2024 and sell it today you would earn a total of 100.00 from holding Lifeway Foods or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
SBM OFFSHORE vs. Lifeway Foods
Performance |
| Timeline |
| SBM OFFSHORE |
| Lifeway Foods |
SBM OFFSHORE and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Lifeway Foods
The main advantage of trading using opposite SBM OFFSHORE and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| SBM OFFSHORE vs. NIGHTINGALE HEALTH EO | SBM OFFSHORE vs. Zoom Video Communications | SBM OFFSHORE vs. Singapore Telecommunications Limited | SBM OFFSHORE vs. CARDINAL HEALTH |
| Lifeway Foods vs. WT OFFSHORE | Lifeway Foods vs. SBM OFFSHORE | Lifeway Foods vs. Xenia Hotels Resorts | Lifeway Foods vs. Shenzhen Investment Limited |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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