Correlation Between SBM Offshore and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on SBM Offshore and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Scandinavian Tobacco.
Diversification Opportunities for SBM Offshore and Scandinavian Tobacco
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SBM and Scandinavian is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of SBM Offshore i.e., SBM Offshore and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between SBM Offshore and Scandinavian Tobacco
Assuming the 90 days horizon SBM Offshore NV is expected to generate 0.66 times more return on investment than Scandinavian Tobacco. However, SBM Offshore NV is 1.51 times less risky than Scandinavian Tobacco. It trades about 0.14 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.29 per unit of risk. If you would invest 1,836 in SBM Offshore NV on August 28, 2024 and sell it today you would earn a total of 44.00 from holding SBM Offshore NV or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| SBM Offshore NV |
| Scandinavian Tobacco |
SBM Offshore and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Scandinavian Tobacco
The main advantage of trading using opposite SBM Offshore and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. RLX Technology | Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. Turning Point Brands |
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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