Correlation Between STMicroelectronics and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Skandinaviska Enskilda 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 STMicroelectronics and Skandinaviska Enskilda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on STMicroelectronics and Skandinaviska Enskilda 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 STMicroelectronics with a short position of Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Skandinaviska Enskilda.
Diversification Opportunities for STMicroelectronics and Skandinaviska Enskilda
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMicroelectronics and Skandinaviska is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda and STMicroelectronics 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 STMicroelectronics NV are associated (or correlated) with Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between STMicroelectronics and Skandinaviska Enskilda
Assuming the 90 days trading horizon STMicroelectronics is expected to generate 7.99 times less return on investment than Skandinaviska Enskilda. In addition to that, STMicroelectronics is 3.18 times more volatile than Skandinaviska Enskilda Banken. It trades about 0.01 of its total potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.13 per unit of volatility. If you would invest 15,300 in Skandinaviska Enskilda Banken on September 15, 2024 and sell it today you would earn a total of 260.00 from holding Skandinaviska Enskilda Banken or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| STMicroelectronics |
| Skandinaviska Enskilda |
STMicroelectronics and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Skandinaviska Enskilda
The main advantage of trading using opposite STMicroelectronics and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.| STMicroelectronics vs. Bank of Georgia | STMicroelectronics vs. Diversified Energy | STMicroelectronics vs. Quantum Blockchain Technologies | STMicroelectronics vs. Blue Star Capital |
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Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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