Correlation Between Affluent Medical and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Affluent Medical 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 Affluent Medical and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affluent Medical SAS and STMicroelectronics NV, you can compare the effects of market volatilities on Affluent Medical 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 Affluent Medical with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affluent Medical and STMicroelectronics.
Diversification Opportunities for Affluent Medical and STMicroelectronics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Affluent and STMicroelectronics is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Affluent Medical SAS and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Affluent Medical 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 Affluent Medical SAS 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 Affluent Medical i.e., Affluent Medical and STMicroelectronics go up and down completely randomly.
Pair Corralation between Affluent Medical and STMicroelectronics
Assuming the 90 days trading horizon Affluent Medical SAS is expected to generate 1.46 times more return on investment than STMicroelectronics. However, Affluent Medical is 1.46 times more volatile than STMicroelectronics NV. It trades about 0.0 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.21 per unit of risk. If you would invest 168.00 in Affluent Medical SAS on August 25, 2024 and sell it today you would lose (2.00) from holding Affluent Medical SAS or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affluent Medical SAS vs. STMicroelectronics NV
Performance |
| Timeline |
| Affluent Medical SAS |
| STMicroelectronics |
Affluent Medical and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affluent Medical and STMicroelectronics
The main advantage of trading using opposite Affluent Medical and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affluent Medical 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.| Affluent Medical vs. Virbac SA | Affluent Medical vs. Boiron SA | Affluent Medical vs. Bonduelle SCA | Affluent Medical vs. LNA Sante SA |
| STMicroelectronics vs. LVMH Mot Hennessy | STMicroelectronics vs. LOreal SA | STMicroelectronics vs. Hermes International SCA | STMicroelectronics vs. Manitou BF SA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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