Correlation Between STMicroelectronics and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Caledonia Mining 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 Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Caledonia Mining, you can compare the effects of market volatilities on STMicroelectronics and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Caledonia Mining.
Diversification Opportunities for STMicroelectronics and Caledonia Mining
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMicroelectronics and Caledonia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Caledonia Mining go up and down completely randomly.
Pair Corralation between STMicroelectronics and Caledonia Mining
Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 0.77 times more return on investment than Caledonia Mining. However, STMicroelectronics NV is 1.3 times less risky than Caledonia Mining. It trades about -0.04 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.42 per unit of risk. If you would invest 2,480 in STMicroelectronics NV on September 2, 2024 and sell it today you would lose (64.00) from holding STMicroelectronics NV or give up 2.58% 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. Caledonia Mining
Performance |
| Timeline |
| STMicroelectronics |
| Caledonia Mining |
STMicroelectronics and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Caledonia Mining
The main advantage of trading using opposite STMicroelectronics and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| STMicroelectronics vs. Thyssenkrupp AG ON | STMicroelectronics vs. Cloudcoco Group PLC | STMicroelectronics vs. Trainline Plc | STMicroelectronics vs. Diversified Energy |
| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Centamin PLC | Caledonia Mining vs. Atalaya Mining |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |