Correlation Between STMicroelectronics and Autins Group
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Autins Group 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 Autins Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Autins Group plc, you can compare the effects of market volatilities on STMicroelectronics and Autins Group 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 Autins Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Autins Group.
Diversification Opportunities for STMicroelectronics and Autins Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STMicroelectronics and Autins is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Autins Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autins Group plc 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 Autins Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autins Group plc has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Autins Group go up and down completely randomly.
Pair Corralation between STMicroelectronics and Autins Group
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Autins Group. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.41 times less risky than Autins Group. The stock trades about -0.1 of its potential returns per unit of risk. The Autins Group plc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Autins Group plc on September 14, 2024 and sell it today you would lose (275.00) from holding Autins Group plc or give up 28.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
STMicroelectronics NV vs. Autins Group plc
Performance |
| Timeline |
| STMicroelectronics |
| Autins Group plc |
STMicroelectronics and Autins Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Autins Group
The main advantage of trading using opposite STMicroelectronics and Autins Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Autins Group 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 Autins Group will offset losses from the drop in Autins Group'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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