Correlation Between Light Science and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Light Science and SBM Offshore 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 Light Science and SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Science Technologies and SBM Offshore NV, you can compare the effects of market volatilities on Light Science and SBM Offshore 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 Light Science with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Science and SBM Offshore.
Diversification Opportunities for Light Science and SBM Offshore
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Light and SBM is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Light Science Technologies and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Light Science 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 Light Science Technologies are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Light Science i.e., Light Science and SBM Offshore go up and down completely randomly.
Pair Corralation between Light Science and SBM Offshore
Assuming the 90 days trading horizon Light Science Technologies is expected to under-perform the SBM Offshore. In addition to that, Light Science is 1.58 times more volatile than SBM Offshore NV. It trades about -0.23 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.1 per unit of volatility. If you would invest 1,736 in SBM Offshore NV on November 2, 2024 and sell it today you would earn a total of 52.00 from holding SBM Offshore NV or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Light Science Technologies vs. SBM Offshore NV
Performance |
| Timeline |
| Light Science Techno |
| SBM Offshore NV |
Light Science and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Science and SBM Offshore
The main advantage of trading using opposite Light Science and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Science position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Light Science vs. Teradata Corp | Light Science vs. Eastinco Mining Exploration | Light Science vs. McEwen Mining | Light Science vs. GoldMining |
| SBM Offshore vs. Ecclesiastical Insurance Office | SBM Offshore vs. bet at home AG | SBM Offshore vs. Silver Bullet Data | SBM Offshore vs. Anglo Asian Mining |
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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