Correlation Between SBM Offshore and Papaya Growth
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Papaya Growth 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 Papaya Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM Offshore NV and Papaya Growth Opportunity, you can compare the effects of market volatilities on SBM Offshore and Papaya Growth 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 Papaya Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Papaya Growth.
Diversification Opportunities for SBM Offshore and Papaya Growth
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SBM and Papaya is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity 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 NV are associated (or correlated) with Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of SBM Offshore i.e., SBM Offshore and Papaya Growth go up and down completely randomly.
Pair Corralation between SBM Offshore and Papaya Growth
Assuming the 90 days horizon SBM Offshore NV is expected to generate 1.78 times more return on investment than Papaya Growth. However, SBM Offshore is 1.78 times more volatile than Papaya Growth Opportunity. It trades about 0.07 of its potential returns per unit of risk. Papaya Growth Opportunity is currently generating about 0.02 per unit of risk. If you would invest 1,302 in SBM Offshore NV on September 1, 2024 and sell it today you would earn a total of 578.00 from holding SBM Offshore NV or generate 44.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 63.17% |
| Values | Daily Returns |
SBM Offshore NV vs. Papaya Growth Opportunity
Performance |
| Timeline |
| SBM Offshore NV |
| Papaya Growth Opportunity |
SBM Offshore and Papaya Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Papaya Growth
The main advantage of trading using opposite SBM Offshore and Papaya Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Papaya Growth 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 Papaya Growth will offset losses from the drop in Papaya Growth's long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Papaya Growth vs. Willamette Valley Vineyards | Papaya Growth vs. Beyond Meat | Papaya Growth vs. Where Food Comes | Papaya Growth vs. Natural Alternatives International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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