Correlation Between STMicroelectronics and Primary Health
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Primary Health 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 Primary Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Primary Health Properties, you can compare the effects of market volatilities on STMicroelectronics and Primary Health 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 Primary Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Primary Health.
Diversification Opportunities for STMicroelectronics and Primary Health
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and Primary is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Primary Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primary Health Properties 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 Primary Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primary Health Properties has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Primary Health go up and down completely randomly.
Pair Corralation between STMicroelectronics and Primary Health
Assuming the 90 days trading horizon STMicroelectronics NV is expected to generate 2.34 times more return on investment than Primary Health. However, STMicroelectronics is 2.34 times more volatile than Primary Health Properties. It trades about 0.03 of its potential returns per unit of risk. Primary Health Properties is currently generating about -0.06 per unit of risk. If you would invest 2,425 in STMicroelectronics NV on September 4, 2024 and sell it today you would earn a total of 28.00 from holding STMicroelectronics NV or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Primary Health Properties
Performance |
| Timeline |
| STMicroelectronics |
| Primary Health Properties |
STMicroelectronics and Primary Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Primary Health
The main advantage of trading using opposite STMicroelectronics and Primary Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Primary Health 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 Primary Health will offset losses from the drop in Primary Health's long position.| STMicroelectronics vs. Sovereign Metals | STMicroelectronics vs. GreenX Metals | STMicroelectronics vs. Fulcrum Metals PLC | STMicroelectronics vs. Zurich Insurance Group |
| Primary Health vs. Hammerson PLC | Primary Health vs. Workspace Group PLC | Primary Health vs. Supermarket Income REIT | Primary Health vs. Reckitt Benckiser Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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