Correlation Between SBM OFFSHORE and POLARX
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and POLARX 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 POLARX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and POLARX LTD, you can compare the effects of market volatilities on SBM OFFSHORE and POLARX 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 POLARX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and POLARX.
Diversification Opportunities for SBM OFFSHORE and POLARX
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between SBM and POLARX is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and POLARX LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLARX LTD 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 POLARX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLARX LTD has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and POLARX go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and POLARX
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 34.43 times less return on investment than POLARX. But when comparing it to its historical volatility, SBM OFFSHORE is 21.96 times less risky than POLARX. It trades about 0.04 of its potential returns per unit of risk. POLARX LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.25 in POLARX LTD on October 13, 2024 and sell it today you would lose (1.20) from holding POLARX LTD or give up 96.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. POLARX LTD
Performance |
| Timeline |
| SBM OFFSHORE |
| POLARX LTD |
SBM OFFSHORE and POLARX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and POLARX
The main advantage of trading using opposite SBM OFFSHORE and POLARX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, POLARX 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 POLARX will offset losses from the drop in POLARX's long position.| SBM OFFSHORE vs. ECHO INVESTMENT ZY | SBM OFFSHORE vs. Taiwan Semiconductor Manufacturing | SBM OFFSHORE vs. New Residential Investment | SBM OFFSHORE vs. Magnachip Semiconductor |
| POLARX vs. GRUPO CARSO A1 | POLARX vs. Daito Trust Construction | POLARX vs. Tokyu Construction Co | POLARX vs. Cars Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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