Correlation Between INTER CARS and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both INTER CARS and STMicroelectronics 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 INTER CARS and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and STMicroelectronics NV, you can compare the effects of market volatilities on INTER CARS and STMicroelectronics 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 INTER CARS with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and STMicroelectronics.
Diversification Opportunities for INTER CARS and STMicroelectronics
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INTER and STMicroelectronics is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and INTER CARS 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 INTER CARS SA are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of INTER CARS i.e., INTER CARS and STMicroelectronics go up and down completely randomly.
Pair Corralation between INTER CARS and STMicroelectronics
Assuming the 90 days horizon INTER CARS SA is expected to generate 0.92 times more return on investment than STMicroelectronics. However, INTER CARS SA is 1.09 times less risky than STMicroelectronics. It trades about 0.16 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.02 per unit of risk. If you would invest 10,540 in INTER CARS SA on September 4, 2024 and sell it today you would earn a total of 660.00 from holding INTER CARS SA or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
INTER CARS SA vs. STMicroelectronics NV
Performance |
| Timeline |
| INTER CARS SA |
| STMicroelectronics |
INTER CARS and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and STMicroelectronics
The main advantage of trading using opposite INTER CARS and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| INTER CARS vs. Dno ASA | INTER CARS vs. PT Astra International | INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings |
| STMicroelectronics vs. Japan Tobacco | STMicroelectronics vs. MCEWEN MINING INC | STMicroelectronics vs. BURLINGTON STORES | STMicroelectronics vs. QURATE RETAIL INC |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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