Correlation Between China BlueChemical and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both China BlueChemical 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 BlueChemical and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and STMICROELECTRONICS, you can compare the effects of market volatilities on China BlueChemical 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 BlueChemical with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and STMICROELECTRONICS.
Diversification Opportunities for China BlueChemical and STMICROELECTRONICS
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and STMICROELECTRONICS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and China BlueChemical 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 BlueChemical 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 China BlueChemical i.e., China BlueChemical and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between China BlueChemical and STMICROELECTRONICS
Assuming the 90 days horizon China BlueChemical is expected to generate 1.69 times more return on investment than STMICROELECTRONICS. However, China BlueChemical is 1.69 times more volatile than STMICROELECTRONICS. It trades about 0.14 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.1 per unit of risk. If you would invest 24.00 in China BlueChemical on October 24, 2024 and sell it today you would earn a total of 2.00 from holding China BlueChemical or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. STMICROELECTRONICS
Performance |
| Timeline |
| China BlueChemical |
| STMICROELECTRONICS |
China BlueChemical and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and STMICROELECTRONICS
The main advantage of trading using opposite China BlueChemical and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical 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's long position.| China BlueChemical vs. Clean Energy Fuels | China BlueChemical vs. Texas Roadhouse | China BlueChemical vs. Gaztransport Technigaz SA | China BlueChemical vs. Commercial Vehicle Group |
| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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