Correlation Between SBM OFFSHORE and ScanSource

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

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

Diversification Opportunities for SBM OFFSHORE and ScanSource

0.73

Correlation Coefficient

SBM OFFSHORE  ScanSource

Poor diversification

The 3 months correlation between SBM and ScanSource is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 are associated (or correlated) with ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and ScanSource go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and ScanSource

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.81 times more return on investment than ScanSource. However, SBM OFFSHORE is 1.24 times less risky than ScanSource. It trades about 0.28 of its potential returns per unit of risk. ScanSource is currently generating about 0.2 per unit of risk. If you would invest  1,706  in SBM OFFSHORE on April 20, 2025 and sell it today you would earn a total of  568.00  from holding SBM OFFSHORE or generate 33.29% return on investment over 90 days.

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

SBM OFFSHORE  vs.  ScanSource

SBM OFFSHORE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SBM OFFSHORE exhibited solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBM OFFSHORE and ScanSource

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

The idea behind SBM OFFSHORE and ScanSource 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.