Correlation Between SBM OFFSHORE and Apollo Medical

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

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

Diversification Opportunities for SBM OFFSHORE and Apollo Medical

0.47

Correlation Coefficient

SBM OFFSHORE  Apollo Medical

Very weak diversification

The 3 months correlation between SBM and Apollo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Apollo Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Medical Holdings 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 Apollo Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Medical Holdings has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Apollo Medical go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and Apollo Medical

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.77 times more return on investment than Apollo Medical. However, SBM OFFSHORE is 1.29 times less risky than Apollo Medical. It trades about -0.23 of its potential returns per unit of risk. Apollo Medical Holdings is currently generating about -0.53 per unit of risk. If you would invest  1,776  in SBM OFFSHORE on September 24, 2024 and sell it today you would lose (109.00) from holding SBM OFFSHORE or give up 6.14% of portfolio value over 90 days.

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

SBM OFFSHORE  vs.  Apollo Medical Holdings

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.

Apollo Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SBM OFFSHORE and Apollo Medical

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

The idea behind SBM OFFSHORE and Apollo Medical Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.