Correlation Between Cornish Metals and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and STMicroelectronics NV, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and STMicroelectronics.
Diversification Opportunities for Cornish Metals and STMicroelectronics
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cornish and STMicroelectronics is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and STMicroelectronics go up and down completely randomly.
Pair Corralation between Cornish Metals and STMicroelectronics
Assuming the 90 days trading horizon Cornish Metals is expected to generate 2.14 times more return on investment than STMicroelectronics. However, Cornish Metals is 2.14 times more volatile than STMicroelectronics NV. It trades about 0.01 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.12 per unit of risk. If you would invest 1,000.00 in Cornish Metals on September 1, 2024 and sell it today you would lose (150.00) from holding Cornish Metals or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. STMicroelectronics NV
Performance |
| Timeline |
| Cornish Metals |
| STMicroelectronics |
Cornish Metals and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and STMicroelectronics
The main advantage of trading using opposite Cornish Metals and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. United Internet AG | Cornish Metals vs. Verizon Communications | Cornish Metals vs. Fulcrum Metals PLC | Cornish Metals vs. Power Metal Resources |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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