Correlation Between SEACOR Marine and ABM Industries

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

By analyzing existing cross correlation between SEACOR Marine Holdings and ABM Industries Incorporated, you can compare the effects of market volatilities on SEACOR Marine and ABM Industries 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 SEACOR Marine with a short position of ABM Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEACOR Marine and ABM Industries.

Diversification Opportunities for SEACOR Marine and ABM Industries

0.84

Correlation Coefficient

SEACOR Marine  ABM Industries

Very poor diversification

The 3 months correlation between SEACOR and ABM is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SEACOR Marine Holdings and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries rporated and SEACOR Marine 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 SEACOR Marine Holdings are associated (or correlated) with ABM Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABM Industries rporated has no effect on the direction of SEACOR Marine i.e., SEACOR Marine and ABM Industries go up and down completely randomly.

Pair Corralation between SEACOR Marine and ABM Industries

Given the investment horizon of 90 days SEACOR Marine Holdings is expected to under-perform the ABM Industries. In addition to that, SEACOR Marine is 2.36 times more volatile than ABM Industries Incorporated. It trades about -0.2 of its total potential returns per unit of risk. ABM Industries Incorporated is currently generating about 0.13 per unit of volatility. If you would invest  4,356  in ABM Industries Incorporated on January 25, 2024 and sell it today you would earn a total of  109.00  from holding ABM Industries Incorporated or generate 2.5% return on investment over 90 days.

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

SEACOR Marine Holdings  vs.  ABM Industries Incorporated

SEACOR Marine Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEACOR Marine Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, SEACOR Marine demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ABM Industries rporated

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ABM Industries Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental drivers, ABM Industries may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with SEACOR Marine and ABM Industries

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

The idea behind SEACOR Marine Holdings and ABM Industries Incorporated 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.