Correlation Between H2O Retailing and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and STMicroelectronics NV, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and STMicroelectronics.
Diversification Opportunities for H2O Retailing and STMicroelectronics
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between H2O and STMicroelectronics is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and STMicroelectronics go up and down completely randomly.
Pair Corralation between H2O Retailing and STMicroelectronics
Assuming the 90 days horizon H2O Retailing is expected to generate 1.05 times more return on investment than STMicroelectronics. However, H2O Retailing is 1.05 times more volatile than STMicroelectronics NV. It trades about 0.06 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.08 per unit of risk. If you would invest 1,070 in H2O Retailing on October 14, 2024 and sell it today you would earn a total of 270.00 from holding H2O Retailing or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. STMicroelectronics NV
Performance |
| Timeline |
| H2O Retailing |
| STMicroelectronics |
H2O Retailing and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and STMicroelectronics
The main advantage of trading using opposite H2O Retailing and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.| H2O Retailing vs. Scandinavian Tobacco Group | H2O Retailing vs. Tradeweb Markets | H2O Retailing vs. Eidesvik Offshore ASA | H2O Retailing vs. CSSC Offshore Marine |
| STMicroelectronics vs. FLOW TRADERS LTD | STMicroelectronics vs. H2O Retailing | STMicroelectronics vs. CARSALESCOM | STMicroelectronics vs. TRADELINK ELECTRON |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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