Correlation Between SBM OFFSHORE and Clearside Biomedical

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

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

Diversification Opportunities for SBM OFFSHORE and Clearside Biomedical

-0.1

Correlation Coefficient

SBM OFFSHORE  Clearside Biomedical

Good diversification

The 3 months correlation between SBM and Clearside is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Clearside Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearside Biomedical 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 Clearside Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearside Biomedical has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Clearside Biomedical go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and Clearside Biomedical

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.13 times less return on investment than Clearside Biomedical. But when comparing it to its historical volatility, SBM OFFSHORE is 2.82 times less risky than Clearside Biomedical. It trades about 0.04 of its potential returns per unit of risk. Clearside Biomedical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  104.00  in Clearside Biomedical on September 24, 2024 and sell it today you would lose (12.00) from holding Clearside Biomedical or give up 11.54% of portfolio value over 90 days.

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

SBM OFFSHORE  vs.  Clearside Biomedical

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.

Clearside Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearside Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary 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.

Pair Trading with SBM OFFSHORE and Clearside Biomedical

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

The idea behind SBM OFFSHORE and Clearside Biomedical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.