Correlation Between SBM OFFSHORE and UNITED INTERNET

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

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

Diversification Opportunities for SBM OFFSHORE and UNITED INTERNET

0.78

Correlation Coefficient

SBM OFFSHORE  UNITED INTERNET

Poor diversification

The 3 months correlation between SBM and UNITED is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and UNITED INTERNET N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED INTERNET N 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 UNITED INTERNET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED INTERNET N has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and UNITED INTERNET go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and UNITED INTERNET

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 0.96 times more return on investment than UNITED INTERNET. However, SBM OFFSHORE is 1.04 times less risky than UNITED INTERNET. It trades about 0.57 of its potential returns per unit of risk. UNITED INTERNET N is currently generating about 0.21 per unit of risk. If you would invest  1,851  in SBM OFFSHORE on March 19, 2025 and sell it today you would earn a total of  367.00  from holding SBM OFFSHORE or generate 19.83% 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.  UNITED INTERNET N

SBM OFFSHORE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 7 (%) 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.

UNITED INTERNET N

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED INTERNET N are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, UNITED INTERNET unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBM OFFSHORE and UNITED INTERNET

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

The idea behind SBM OFFSHORE and UNITED INTERNET N 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.