Correlation Between Easy Software and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and STMicroelectronics NV, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and STMicroelectronics.
Diversification Opportunities for Easy Software and STMicroelectronics
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Easy and STMicroelectronics is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Easy Software 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 Easy Software AG 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 Easy Software i.e., Easy Software and STMicroelectronics go up and down completely randomly.
Pair Corralation between Easy Software and STMicroelectronics
Assuming the 90 days trading horizon Easy Software AG is expected to generate 1.13 times more return on investment than STMicroelectronics. However, Easy Software is 1.13 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 -0.25 per unit of risk. If you would invest 1,800 in Easy Software AG on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Easy Software AG or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. STMicroelectronics NV
Performance |
| Timeline |
| Easy Software AG |
| STMicroelectronics |
Easy Software and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and STMicroelectronics
The main advantage of trading using opposite Easy Software and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. Suntory Beverage Food | Easy Software vs. Austevoll Seafood ASA | Easy Software vs. ANGANG STEEL H | Easy Software vs. Axfood AB |
| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Texas Instruments Incorporated |
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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