Correlation Between SBM OFFSHORE and ULTRA CLEAN
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and ULTRA CLEAN 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 ULTRA CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on SBM OFFSHORE and ULTRA CLEAN 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 ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and ULTRA CLEAN.
Diversification Opportunities for SBM OFFSHORE and ULTRA CLEAN
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and ULTRA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS 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 ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and ULTRA CLEAN go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and ULTRA CLEAN
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.58 times more return on investment than ULTRA CLEAN. However, SBM OFFSHORE is 1.73 times less risky than ULTRA CLEAN. It trades about 0.09 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.02 per unit of risk. If you would invest 1,391 in SBM OFFSHORE on September 3, 2024 and sell it today you would earn a total of 305.00 from holding SBM OFFSHORE or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. ULTRA CLEAN HLDGS
Performance |
| Timeline |
| SBM OFFSHORE |
| ULTRA CLEAN HLDGS |
SBM OFFSHORE and ULTRA CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and ULTRA CLEAN
The main advantage of trading using opposite SBM OFFSHORE and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, ULTRA CLEAN 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 ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.| SBM OFFSHORE vs. TOTAL GABON | SBM OFFSHORE vs. Walgreens Boots Alliance | SBM OFFSHORE vs. Peak Resources Limited |
| ULTRA CLEAN vs. TOTAL GABON | ULTRA CLEAN vs. Walgreens Boots Alliance | ULTRA CLEAN vs. Peak Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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