Correlation Between Computer and SBM OFFSHORE

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

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

Diversification Opportunities for Computer and SBM OFFSHORE

0.79

Correlation Coefficient

Computer  SBM OFFSHORE

Poor diversification

The 3 months correlation between Computer and SBM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Computer And Technologies and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Computer 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 Computer And Technologies 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 has no effect on the direction of Computer i.e., Computer and SBM OFFSHORE go up and down completely randomly.

Pair Corralation between Computer and SBM OFFSHORE

Assuming the 90 days horizon Computer is expected to generate 1.19 times less return on investment than SBM OFFSHORE. In addition to that, Computer is 2.43 times more volatile than SBM OFFSHORE. It trades about 0.1 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.28 per unit of volatility. If you would invest  1,706  in SBM OFFSHORE on April 22, 2025 and sell it today you would earn a total of  560.00  from holding SBM OFFSHORE or generate 32.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Computer And Technologies  vs.  SBM OFFSHORE

Computer And Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Computer And Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Computer reported solid returns over the last few months and may actually be approaching a breakup point.

SBM OFFSHORE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, SBM OFFSHORE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer and SBM OFFSHORE

The main advantage of trading using opposite Computer and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer 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 Computer And Technologies and SBM OFFSHORE 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.