Correlation Between Basic Fit and SBM Offshore

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

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

Diversification Opportunities for Basic Fit and SBM Offshore

0.92

Correlation Coefficient

Basic Fit  SBM Offshore

Almost no diversification

The 3 months correlation between Basic and SBM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Basic Fit 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 Basic Fit 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 Basic Fit 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 Basic Fit i.e., Basic Fit and SBM Offshore go up and down completely randomly.

Pair Corralation between Basic Fit and SBM Offshore

Assuming the 90 days trading horizon Basic Fit NV is expected to generate 1.22 times more return on investment than SBM Offshore. However, Basic Fit is 1.22 times more volatile than SBM Offshore NV. It trades about 0.33 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.35 per unit of risk. If you would invest  1,912  in Basic Fit NV on April 22, 2025 and sell it today you would earn a total of  716.00  from holding Basic Fit NV or generate 37.45% return on investment over 90 days.

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

Basic Fit NV  vs.  SBM Offshore NV

Basic Fit NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Fit NV are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Basic Fit unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 27 (%) 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 Basic Fit and SBM Offshore

The main advantage of trading using opposite Basic Fit and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Fit 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 Basic Fit 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.