Correlation Between SBM Offshore and Supermarket Income

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

Diversification Opportunities for SBM Offshore and Supermarket Income

-0.82

Correlation Coefficient

SBM Offshore  Supermarket Income

Pay attention - limited upside

The 3 months correlation between SBM and Supermarket is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of SBM Offshore i.e., SBM Offshore and Supermarket Income go up and down completely randomly.

Pair Corralation between SBM Offshore and Supermarket Income

Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 1.5 times more return on investment than Supermarket Income. However, SBM Offshore is 1.5 times more volatile than Supermarket Income REIT. It trades about 0.02 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.01 per unit of risk. If you would invest  1,695  in SBM Offshore NV on August 31, 2024 and sell it today you would earn a total of  18.00  from holding SBM Offshore NV or generate 1.06% return on investment over 90 days.

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

SBM Offshore NV  vs.  Supermarket Income REIT

SBM Offshore NV

Risk-Adjusted Performance

1 of 100

Weak

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

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Supermarket Income is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SBM Offshore and Supermarket Income

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

The idea behind SBM Offshore NV and Supermarket Income REIT 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 Transaction History module to view history of all your transactions and understand their impact on performance.