Correlation Between Sligro Food and SBM Offshore

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

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

Diversification Opportunities for Sligro Food and SBM Offshore

0.81

Correlation Coefficient

Sligro Food  SBM Offshore

Very poor diversification

The 3 months correlation between Sligro and SBM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group 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 Sligro Food 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 Sligro Food Group 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 Sligro Food i.e., Sligro Food and SBM Offshore go up and down completely randomly.

Pair Corralation between Sligro Food and SBM Offshore

Assuming the 90 days trading horizon Sligro Food is expected to generate 5.56 times less return on investment than SBM Offshore. In addition to that, Sligro Food is 1.94 times more volatile than SBM Offshore NV. It trades about 0.03 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.35 per unit of volatility. 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	Strong
Accuracy	98.44%
Values	Daily Returns

Sligro Food Group  vs.  SBM Offshore NV

Sligro Food Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sligro Food Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sligro Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Sligro Food and SBM Offshore

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

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.