Correlation Between SBM OFFSHORE and Nishi Nippon
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Nishi Nippon 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 Nishi Nippon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Nishi Nippon Railroad Co, you can compare the effects of market volatilities on SBM OFFSHORE and Nishi Nippon 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 Nishi Nippon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Nishi Nippon.
Diversification Opportunities for SBM OFFSHORE and Nishi Nippon
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Nishi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Nishi Nippon Railroad Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nishi Nippon Railroad 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 Nishi Nippon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nishi Nippon Railroad has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Nishi Nippon go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Nishi Nippon
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.29 times less return on investment than Nishi Nippon. In addition to that, SBM OFFSHORE is 1.09 times more volatile than Nishi Nippon Railroad Co. It trades about 0.21 of its total potential returns per unit of risk. Nishi Nippon Railroad Co is currently generating about 0.29 per unit of volatility. If you would invest 1,290 in Nishi Nippon Railroad Co on August 25, 2024 and sell it today you would earn a total of 140.00 from holding Nishi Nippon Railroad Co or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SBM OFFSHORE vs. Nishi Nippon Railroad Co
Performance |
| Timeline |
| SBM OFFSHORE |
| Nishi Nippon Railroad |
SBM OFFSHORE and Nishi Nippon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Nishi Nippon
The main advantage of trading using opposite SBM OFFSHORE and Nishi Nippon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Nishi Nippon 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 Nishi Nippon will offset losses from the drop in Nishi Nippon's long position.| SBM OFFSHORE vs. Vulcan Materials | SBM OFFSHORE vs. Goodyear Tire Rubber | SBM OFFSHORE vs. Penn National Gaming | SBM OFFSHORE vs. THRACE PLASTICS |
| Nishi Nippon vs. CRRC Limited | Nishi Nippon vs. Central Japan Railway | Nishi Nippon vs. Westinghouse Air Brake | Nishi Nippon 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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