Correlation Between ChargePoint Holdings and SBM Offshore

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

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

Diversification Opportunities for ChargePoint Holdings and SBM Offshore

-0.26

Correlation Coefficient

ChargePoint Holdings  SBM Offshore

Very good diversification

The 3 months correlation between ChargePoint and SBM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint Holdings and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and ChargePoint Holdings 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 ChargePoint Holdings 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 NV has no effect on the direction of ChargePoint Holdings i.e., ChargePoint Holdings and SBM Offshore go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and SBM Offshore

Given the investment horizon of 90 days ChargePoint Holdings is expected to generate 2.02 times more return on investment than SBM Offshore. However, ChargePoint Holdings is 2.02 times more volatile than SBM Offshore NV. It trades about 0.02 of its potential returns per unit of risk. SBM Offshore NV is currently generating about -0.18 per unit of risk. If you would invest  125.00  in ChargePoint Holdings on September 24, 2024 and sell it today you would lose (1.00) from holding ChargePoint Holdings or give up 0.8% of portfolio value over 90 days.

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

ChargePoint Holdings  vs.  SBM Offshore NV

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SBM Offshore NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM Offshore NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, SBM Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ChargePoint Holdings and SBM Offshore

The main advantage of trading using opposite ChargePoint Holdings and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChargePoint Holdings 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 ChargePoint Holdings and SBM Offshore 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.