Correlation Between CENTURIA OFFICE and SBM OFFSHORE

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

By analyzing existing cross correlation between CENTURIA OFFICE REIT and SBM OFFSHORE, you can compare the effects of market volatilities on CENTURIA OFFICE 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 CENTURIA OFFICE with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and SBM OFFSHORE.

Diversification Opportunities for CENTURIA OFFICE and SBM OFFSHORE

-0.01

Correlation Coefficient

CENTURIA OFFICE  SBM OFFSHORE

Good diversification

The 3 months correlation between CENTURIA and SBM is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and CENTURIA OFFICE 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 CENTURIA OFFICE REIT 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 CENTURIA OFFICE i.e., CENTURIA OFFICE and SBM OFFSHORE go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and SBM OFFSHORE

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the SBM OFFSHORE. In addition to that, CENTURIA OFFICE is 1.0 times more volatile than SBM OFFSHORE. It trades about -0.18 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.03 per unit of volatility. If you would invest  1,635  in SBM OFFSHORE on September 27, 2024 and sell it today you would earn a total of  37.00  from holding SBM OFFSHORE or generate 2.26% return on investment over 90 days.

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

CENTURIA OFFICE REIT  vs.  SBM OFFSHORE

CENTURIA OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SBM OFFSHORE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 2 (%) 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.

Pair Trading with CENTURIA OFFICE and SBM OFFSHORE

The main advantage of trading using opposite CENTURIA OFFICE and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE 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.

The idea behind CENTURIA OFFICE REIT and SBM OFFSHORE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.