Correlation Between STMicroelectronics and Axway Software
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Axway Software 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 Axway Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Axway Software SA, you can compare the effects of market volatilities on STMicroelectronics and Axway Software 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 Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Axway Software.
Diversification Opportunities for STMicroelectronics and Axway Software
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and Axway is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA 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 Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Axway Software go up and down completely randomly.
Pair Corralation between STMicroelectronics and Axway Software
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Axway Software. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 3.02 times less risky than Axway Software. The stock trades about -0.03 of its potential returns per unit of risk. The Axway Software SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,444 in Axway Software SA on September 3, 2024 and sell it today you would earn a total of 1,326 from holding Axway Software SA or generate 91.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.79% |
| Values | Daily Returns |
STMicroelectronics NV vs. Axway Software SA
Performance |
| Timeline |
| STMicroelectronics |
| Axway Software SA |
STMicroelectronics and Axway Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Axway Software
The main advantage of trading using opposite STMicroelectronics and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Axway Software 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 Axway Software will offset losses from the drop in Axway Software's long position.| STMicroelectronics vs. Deltex Medical Group | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Associated British Foods | STMicroelectronics vs. Medical Properties Trust |
| Axway Software vs. Wheaton Precious Metals | Axway Software vs. Hochschild Mining plc | Axway Software vs. AMG Advanced Metallurgical | Axway Software vs. Jacquet Metal Service |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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