Correlation Between SBM Offshore and Vastned Retail

Can any of the company-specific risk be diversified away by investing in both SBM Offshore and Vastned Retail 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 Vastned Retail 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 Vastned Retail NV, you can compare the effects of market volatilities on SBM Offshore and Vastned Retail 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 Vastned Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Vastned Retail.

Diversification Opportunities for SBM Offshore and Vastned Retail

0.03

Correlation Coefficient

SBM Offshore  Vastned Retail

Significant diversification

The 3 months correlation between SBM and Vastned is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of SBM Offshore i.e., SBM Offshore and Vastned Retail go up and down completely randomly.

Pair Corralation between SBM Offshore and Vastned Retail

Assuming the 90 days trading horizon SBM Offshore is expected to generate 1.06 times less return on investment than Vastned Retail. In addition to that, SBM Offshore is 1.05 times more volatile than Vastned Retail NV. It trades about 0.04 of its total potential returns per unit of risk. Vastned Retail NV is currently generating about 0.04 per unit of volatility. If you would invest  1,843  in Vastned Retail NV on August 27, 2024 and sell it today you would earn a total of  582.00  from holding Vastned Retail NV or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SBM Offshore NV  vs.  Vastned Retail NV

SBM Offshore NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SBM Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Vastned Retail NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SBM Offshore and Vastned Retail

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

The idea behind SBM Offshore NV and Vastned Retail NV 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.