Correlation Between Aeluma and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Aeluma 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 Aeluma and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeluma Inc and STMicroelectronics NV, you can compare the effects of market volatilities on Aeluma 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 Aeluma with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeluma and STMicroelectronics.
Diversification Opportunities for Aeluma and STMicroelectronics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeluma and STMicroelectronics is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aeluma Inc and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Aeluma 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 Aeluma Inc 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 Aeluma i.e., Aeluma and STMicroelectronics go up and down completely randomly.
Pair Corralation between Aeluma and STMicroelectronics
Given the investment horizon of 90 days Aeluma Inc is expected to generate 2.4 times more return on investment than STMicroelectronics. However, Aeluma is 2.4 times more volatile than STMicroelectronics NV. It trades about 0.05 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.02 per unit of risk. If you would invest 210.00 in Aeluma Inc on August 25, 2024 and sell it today you would earn a total of 149.00 from holding Aeluma Inc or generate 70.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Aeluma Inc vs. STMicroelectronics NV
Performance |
| Timeline |
| Aeluma Inc |
| STMicroelectronics |
Aeluma and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeluma and STMicroelectronics
The main advantage of trading using opposite Aeluma and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeluma 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.| Aeluma vs. Archer Materials Limited | Aeluma vs. Alphawave IP Group | Aeluma vs. BrainChip Holdings | Aeluma vs. Arteris |
| STMicroelectronics vs. Silicon Laboratories | STMicroelectronics vs. Power Integrations | STMicroelectronics vs. Diodes Incorporated | STMicroelectronics vs. MaxLinear |
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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