Correlation Between REMEDY ENTERTAINMENT and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REMEDY ENTERTAINMENT OYJ and STMicroelectronics NV, you can compare the effects of market volatilities on REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of REMEDY ENTERTAINMENT and STMicroelectronics.
Diversification Opportunities for REMEDY ENTERTAINMENT and STMicroelectronics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REMEDY and STMicroelectronics is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding REMEDY ENTERTAINMENT OYJ and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ 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 REMEDY ENTERTAINMENT i.e., REMEDY ENTERTAINMENT and STMicroelectronics go up and down completely randomly.
Pair Corralation between REMEDY ENTERTAINMENT and STMicroelectronics
Assuming the 90 days horizon REMEDY ENTERTAINMENT OYJ is expected to generate 1.12 times more return on investment than STMicroelectronics. However, REMEDY ENTERTAINMENT is 1.12 times more volatile than STMicroelectronics NV. It trades about -0.02 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.02 per unit of risk. If you would invest 2,116 in REMEDY ENTERTAINMENT OYJ on October 11, 2024 and sell it today you would lose (660.00) from holding REMEDY ENTERTAINMENT OYJ or give up 31.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
REMEDY ENTERTAINMENT OYJ vs. STMicroelectronics NV
Performance |
| Timeline |
| REMEDY ENTERTAINMENT OYJ |
| STMicroelectronics |
REMEDY ENTERTAINMENT and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REMEDY ENTERTAINMENT and STMicroelectronics
The main advantage of trading using opposite REMEDY ENTERTAINMENT and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REMEDY ENTERTAINMENT 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.| REMEDY ENTERTAINMENT vs. NURAN WIRELESS INC | REMEDY ENTERTAINMENT vs. Transport International Holdings | REMEDY ENTERTAINMENT vs. Gaztransport Technigaz SA | REMEDY ENTERTAINMENT vs. KENEDIX OFFICE INV |
| STMicroelectronics vs. TAL Education Group | STMicroelectronics vs. THRACE PLASTICS | STMicroelectronics vs. Summit Materials | STMicroelectronics vs. Heidelberg Materials AG |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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