Correlation Between Take Two and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and SBM OFFSHORE, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and SBM OFFSHORE.
Diversification Opportunities for Take Two and SBM OFFSHORE
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take and SBM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Take Two and SBM OFFSHORE
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 1.01 times more return on investment than SBM OFFSHORE. However, Take Two is 1.01 times more volatile than SBM OFFSHORE. It trades about 0.06 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.06 per unit of risk. If you would invest 13,072 in Take Two Interactive Software on August 29, 2024 and sell it today you would earn a total of 4,650 from holding Take Two Interactive Software or generate 35.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. SBM OFFSHORE
Performance |
| Timeline |
| Take Two Interactive |
| SBM OFFSHORE |
Take Two and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and SBM OFFSHORE
The main advantage of trading using opposite Take Two and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.| Take Two vs. Sea Limited | Take Two vs. Superior Plus Corp | Take Two vs. NMI Holdings | Take Two vs. SIVERS SEMICONDUCTORS AB |
| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Superior Plus Corp | SBM OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
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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