Correlation Between SBM Offshore and Aperam SA
Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Aperam SA 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 Aperam SA 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 Aperam SA, you can compare the effects of market volatilities on SBM Offshore and Aperam SA 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 Aperam SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Aperam SA.
Diversification Opportunities for SBM Offshore and Aperam SA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Aperam is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Aperam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam SA 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 Aperam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam SA has no effect on the direction of SBM Offshore i.e., SBM Offshore and Aperam SA go up and down completely randomly.
Pair Corralation between SBM Offshore and Aperam SA
Assuming the 90 days trading horizon SBM Offshore is expected to generate 1.82 times less return on investment than Aperam SA. But when comparing it to its historical volatility, SBM Offshore NV is 1.17 times less risky than Aperam SA. It trades about 0.15 of its potential returns per unit of risk. Aperam SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,517 in Aperam SA on August 27, 2024 and sell it today you would earn a total of 217.00 from holding Aperam SA or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Aperam SA
Performance |
| Timeline |
| SBM Offshore NV |
| Aperam SA |
SBM Offshore and Aperam SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Aperam SA
The main advantage of trading using opposite SBM Offshore and Aperam SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore position performs unexpectedly, Aperam SA 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 Aperam SA will offset losses from the drop in Aperam SA's long position.| SBM Offshore vs. Koninklijke Vopak NV | SBM Offshore vs. Randstad NV | SBM Offshore vs. Aalberts Industries NV | SBM Offshore vs. iShares SP 500 |
| Aperam SA vs. ArcelorMittal SA | Aperam SA vs. NN Group NV | Aperam SA vs. SBM Offshore NV | Aperam SA vs. BE Semiconductor Industries |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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