Correlation Between China Finance and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both China Finance 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 China Finance and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Finance and STMicroelectronics NV ADR, you can compare the effects of market volatilities on China Finance 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 China Finance with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Finance and STMicroelectronics.
Diversification Opportunities for China Finance and STMicroelectronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and STMicroelectronics is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Finance and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR and China Finance 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 China Finance 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 NV ADR has no effect on the direction of China Finance i.e., China Finance and STMicroelectronics go up and down completely randomly.
Pair Corralation between China Finance and STMicroelectronics
Given the investment horizon of 90 days China Finance is expected to generate 29.59 times more return on investment than STMicroelectronics. However, China Finance is 29.59 times more volatile than STMicroelectronics NV ADR. It trades about 0.08 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.08 per unit of risk. If you would invest 0.00 in China Finance on September 20, 2024 and sell it today you would earn a total of 0.00 from holding China Finance or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Finance vs. STMicroelectronics NV ADR
Performance |
| Timeline |
| China Finance |
| STMicroelectronics NV ADR |
China Finance and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Finance and STMicroelectronics
The main advantage of trading using opposite China Finance and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Finance 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.| China Finance vs. STMicroelectronics NV ADR | China Finance vs. NH Foods Ltd | China Finance vs. Noble plc | China Finance vs. Village Super Market |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |