Correlation Between CHEMICAL INDUSTRIES and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and SBM OFFSHORE, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and SBM OFFSHORE.
Diversification Opportunities for CHEMICAL INDUSTRIES and SBM OFFSHORE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and SBM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and SBM OFFSHORE
If you would invest 43.00 in CHEMICAL INDUSTRIES on September 14, 2024 and sell it today you would earn a total of 0.00 from holding CHEMICAL INDUSTRIES or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. SBM OFFSHORE
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| SBM OFFSHORE |
CHEMICAL INDUSTRIES and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and SBM OFFSHORE
The main advantage of trading using opposite CHEMICAL INDUSTRIES and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES 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.| CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc | CHEMICAL INDUSTRIES vs. Apple Inc |
| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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