Correlation Between STMicroelectronics and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and AMG Advanced 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 AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and AMG Advanced Metallurgical, you can compare the effects of market volatilities on STMicroelectronics and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and AMG Advanced.
Diversification Opportunities for STMicroelectronics and AMG Advanced
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STMicroelectronics and AMG is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and AMG Advanced go up and down completely randomly.
Pair Corralation between STMicroelectronics and AMG Advanced
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the AMG Advanced. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.07 times less risky than AMG Advanced. The stock trades about -0.12 of its potential returns per unit of risk. The AMG Advanced Metallurgical is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,078 in AMG Advanced Metallurgical on September 1, 2024 and sell it today you would lose (665.00) from holding AMG Advanced Metallurgical or give up 32.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| STMicroelectronics |
| AMG Advanced Metallu |
STMicroelectronics and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and AMG Advanced
The main advantage of trading using opposite STMicroelectronics and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| STMicroelectronics vs. Zoom Video Communications | STMicroelectronics vs. Tyson Foods Cl | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Aeorema Communications Plc |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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