Correlation Between Sartorius Stedim and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Sartorius Stedim 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 Sartorius Stedim and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sartorius Stedim Biotech and STMicroelectronics NV, you can compare the effects of market volatilities on Sartorius Stedim 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 Sartorius Stedim with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and STMicroelectronics.
Diversification Opportunities for Sartorius Stedim and STMicroelectronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sartorius and STMicroelectronics is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Sartorius Stedim 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 Sartorius Stedim Biotech 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 Sartorius Stedim i.e., Sartorius Stedim and STMicroelectronics go up and down completely randomly.
Pair Corralation between Sartorius Stedim and STMicroelectronics
Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 1.13 times more return on investment than STMicroelectronics. However, Sartorius Stedim is 1.13 times more volatile than STMicroelectronics NV. It trades about -0.16 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.21 per unit of risk. If you would invest 19,240 in Sartorius Stedim Biotech on August 25, 2024 and sell it today you would lose (1,740) from holding Sartorius Stedim Biotech or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sartorius Stedim Biotech vs. STMicroelectronics NV
Performance |
| Timeline |
| Sartorius Stedim Biotech |
| STMicroelectronics |
Sartorius Stedim and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sartorius Stedim and STMicroelectronics
The main advantage of trading using opposite Sartorius Stedim and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sartorius Stedim 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.| Sartorius Stedim vs. Eurofins Scientific SE | Sartorius Stedim vs. Teleperformance SE | Sartorius Stedim vs. Biomerieux SA | Sartorius Stedim vs. Dassault Systemes SE |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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