Correlation Between SBM OFFSHORE and Corporate Travel

Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Corporate Travel 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 Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SBM OFFSHORE and Corporate Travel Management, you can compare the effects of market volatilities on SBM OFFSHORE and Corporate Travel 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 Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Corporate Travel.

Diversification Opportunities for SBM OFFSHORE and Corporate Travel

0.37

Correlation Coefficient

SBM OFFSHORE  Corporate Travel

Weak diversification

The 3 months correlation between SBM and Corporate is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 are associated (or correlated) with Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Corporate Travel go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and Corporate Travel

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.58 times more return on investment than Corporate Travel. However, SBM OFFSHORE is 1.72 times less risky than Corporate Travel. It trades about -0.21 of its potential returns per unit of risk. Corporate Travel Management is currently generating about -0.24 per unit of risk. If you would invest  1,776  in SBM OFFSHORE on September 24, 2024 and sell it today you would lose (104.00) from holding SBM OFFSHORE or give up 5.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

SBM OFFSHORE  vs.  Corporate Travel Management

SBM OFFSHORE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SBM OFFSHORE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Corporate Travel Man

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SBM OFFSHORE and Corporate Travel

The main advantage of trading using opposite SBM OFFSHORE and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.

The idea behind SBM OFFSHORE and Corporate Travel Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.