Correlation Between SBM Offshore and Catalyst Media

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

Diversification Opportunities for SBM Offshore and Catalyst Media

0.88

Correlation Coefficient

SBM Offshore  Catalyst Media

Very poor diversification

The 3 months correlation between SBM and Catalyst is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of SBM Offshore i.e., SBM Offshore and Catalyst Media go up and down completely randomly.

Pair Corralation between SBM Offshore and Catalyst Media

Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.44 times more return on investment than Catalyst Media. However, SBM Offshore NV is 2.25 times less risky than Catalyst Media. It trades about 0.36 of its potential returns per unit of risk. Catalyst Media Group is currently generating about 0.12 per unit of risk. If you would invest  1,756  in SBM Offshore NV on April 23, 2025 and sell it today you would earn a total of  547.00  from holding SBM Offshore NV or generate 31.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.77%
Values	Daily Returns

SBM Offshore NV  vs.  Catalyst Media Group

SBM Offshore NV

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, SBM Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Media Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBM Offshore and Catalyst Media

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

The idea behind SBM Offshore NV and Catalyst Media Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.