Correlation Between SBM Offshore and Flow Traders

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

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

Diversification Opportunities for SBM Offshore and Flow Traders

0.07

Correlation Coefficient

SBM Offshore  Flow Traders

Significant diversification

The 3 months correlation between SBM and Flow is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Flow Traders BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders BV 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 NV are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders BV has no effect on the direction of SBM Offshore i.e., SBM Offshore and Flow Traders go up and down completely randomly.

Pair Corralation between SBM Offshore and Flow Traders

Assuming the 90 days trading horizon SBM Offshore NV is expected to generate 0.39 times more return on investment than Flow Traders. However, SBM Offshore NV is 2.59 times less risky than Flow Traders. It trades about 0.35 of its potential returns per unit of risk. Flow Traders BV is currently generating about -0.02 per unit of risk. If you would invest  1,714  in SBM Offshore NV on April 20, 2025 and sell it today you would earn a total of  552.00  from holding SBM Offshore NV or generate 32.21% return on investment over 90 days.

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

SBM Offshore NV  vs.  Flow Traders BV

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.

Flow Traders BV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flow Traders BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Flow Traders is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SBM Offshore and Flow Traders

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

The idea behind SBM Offshore NV and Flow Traders BV 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.