Correlation Between SBM Offshore and LBG Media

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

Diversification Opportunities for SBM Offshore and LBG Media

0.66

Correlation Coefficient

SBM Offshore  LBG Media

Poor diversification

The 3 months correlation between SBM and LBG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of SBM Offshore i.e., SBM Offshore and LBG Media go up and down completely randomly.

Pair Corralation between SBM Offshore and LBG Media

Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.38 times more return on investment than LBG Media. However, SBM Offshore NV is 2.65 times less risky than LBG Media. It trades about 0.36 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.02 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	Significant
Accuracy	96.77%
Values	Daily Returns

SBM Offshore NV  vs.  LBG Media PLC

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.

LBG Media PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LBG Media PLC 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, LBG Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SBM Offshore and LBG Media

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

The idea behind SBM Offshore NV and LBG Media PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.