Correlation Between STMicroelectronics and Bank of Georgia
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Bank of Georgia 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 Bank of Georgia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Bank of Georgia, you can compare the effects of market volatilities on STMicroelectronics and Bank of Georgia 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 Bank of Georgia. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Bank of Georgia.
Diversification Opportunities for STMicroelectronics and Bank of Georgia
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between STMicroelectronics and Bank is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Bank of Georgia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Georgia 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 Bank of Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Georgia has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Bank of Georgia go up and down completely randomly.
Pair Corralation between STMicroelectronics and Bank of Georgia
Assuming the 90 days trading horizon STMicroelectronics NV is expected to under-perform the Bank of Georgia. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.07 times less risky than Bank of Georgia. The stock trades about -0.01 of its potential returns per unit of risk. The Bank of Georgia is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 225,287 in Bank of Georgia on September 14, 2024 and sell it today you would earn a total of 238,213 from holding Bank of Georgia or generate 105.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
STMicroelectronics NV vs. Bank of Georgia
Performance |
| Timeline |
| STMicroelectronics |
| Bank of Georgia |
STMicroelectronics and Bank of Georgia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Bank of Georgia
The main advantage of trading using opposite STMicroelectronics and Bank of Georgia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Bank of Georgia 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 Bank of Georgia will offset losses from the drop in Bank of Georgia'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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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