Correlation Between STMicroelectronics and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Cairo Communication 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 Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Cairo Communication SpA, you can compare the effects of market volatilities on STMicroelectronics and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Cairo Communication.
Diversification Opportunities for STMicroelectronics and Cairo Communication
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Cairo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Cairo Communication go up and down completely randomly.
Pair Corralation between STMicroelectronics and Cairo Communication
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Cairo Communication. In addition to that, STMicroelectronics is 1.13 times more volatile than Cairo Communication SpA. It trades about -0.1 of its total potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.09 per unit of volatility. If you would invest 161.00 in Cairo Communication SpA on September 4, 2024 and sell it today you would earn a total of 73.00 from holding Cairo Communication SpA or generate 45.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Cairo Communication SpA
Performance |
| Timeline |
| STMicroelectronics |
| Cairo Communication SpA |
STMicroelectronics and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Cairo Communication
The main advantage of trading using opposite STMicroelectronics and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| STMicroelectronics vs. Sovereign Metals | STMicroelectronics vs. GreenX Metals | STMicroelectronics vs. Fulcrum Metals PLC | STMicroelectronics vs. Zurich Insurance Group |
| Cairo Communication vs. Ecofin Global Utilities | Cairo Communication vs. Target Healthcare REIT | Cairo Communication vs. Cardinal Health | Cairo Communication vs. Charter Communications Cl |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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