Correlation Between FIREWEED METALS and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both FIREWEED METALS 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 FIREWEED METALS and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIREWEED METALS P and SBM OFFSHORE, you can compare the effects of market volatilities on FIREWEED METALS 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 FIREWEED METALS with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIREWEED METALS and SBM OFFSHORE.
Diversification Opportunities for FIREWEED METALS and SBM OFFSHORE
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIREWEED and SBM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and FIREWEED METALS 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 FIREWEED METALS P 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 has no effect on the direction of FIREWEED METALS i.e., FIREWEED METALS and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between FIREWEED METALS and SBM OFFSHORE
Assuming the 90 days horizon FIREWEED METALS is expected to generate 1.43 times less return on investment than SBM OFFSHORE. In addition to that, FIREWEED METALS is 1.51 times more volatile than SBM OFFSHORE. It trades about 0.13 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.28 per unit of volatility. If you would invest 1,755 in SBM OFFSHORE on November 28, 2024 and sell it today you would earn a total of 283.00 from holding SBM OFFSHORE or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIREWEED METALS P vs. SBM OFFSHORE
Performance |
| Timeline |
| FIREWEED METALS P |
| SBM OFFSHORE |
FIREWEED METALS and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIREWEED METALS and SBM OFFSHORE
The main advantage of trading using opposite FIREWEED METALS and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIREWEED METALS 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.| FIREWEED METALS vs. Mitsubishi Materials | FIREWEED METALS vs. NAGOYA RAILROAD | FIREWEED METALS vs. THRACE PLASTICS | FIREWEED METALS vs. Kaufman Broad SA |
| SBM OFFSHORE vs. ECHO INVESTMENT ZY | SBM OFFSHORE vs. Japan Asia Investment | SBM OFFSHORE vs. The Yokohama Rubber | SBM OFFSHORE vs. SANOK RUBBER ZY |
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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