Correlation Between ASR Nederland and SBM Offshore

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

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

Diversification Opportunities for ASR Nederland and SBM Offshore

0.71

Correlation Coefficient

ASR Nederland  SBM Offshore

Poor diversification

The 3 months correlation between ASR and SBM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ASR Nederland NV 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 ASR Nederland 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 ASR Nederland NV 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 ASR Nederland i.e., ASR Nederland and SBM Offshore go up and down completely randomly.

Pair Corralation between ASR Nederland and SBM Offshore

Assuming the 90 days trading horizon ASR Nederland is expected to generate 1.96 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, ASR Nederland NV is 1.31 times less risky than SBM Offshore. It trades about 0.3 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  1,556  in SBM Offshore NV on April 6, 2025 and sell it today you would earn a total of  728.00  from holding SBM Offshore NV or generate 46.79% return on investment over 90 days.

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

ASR Nederland NV  vs.  SBM Offshore NV

ASR Nederland NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ASR Nederland NV are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ASR Nederland sustained solid returns over the last few months and may actually be approaching a breakup point.

SBM Offshore NV

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBM Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASR Nederland and SBM Offshore

The main advantage of trading using opposite ASR Nederland and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASR Nederland 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 ASR Nederland NV 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.