Correlation Between CMG Cleantech and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both CMG Cleantech 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 CMG Cleantech and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMG Cleantech SA and STMicroelectronics NV, you can compare the effects of market volatilities on CMG Cleantech 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 CMG Cleantech with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Cleantech and STMicroelectronics.
Diversification Opportunities for CMG Cleantech and STMicroelectronics
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CMG and STMicroelectronics is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and CMG Cleantech 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 CMG Cleantech SA 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 CMG Cleantech i.e., CMG Cleantech and STMicroelectronics go up and down completely randomly.
Pair Corralation between CMG Cleantech and STMicroelectronics
Assuming the 90 days trading horizon CMG Cleantech SA is expected to under-perform the STMicroelectronics. In addition to that, CMG Cleantech is 1.1 times more volatile than STMicroelectronics NV. It trades about -0.01 of its total potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.12 per unit of volatility. If you would invest 2,358 in STMicroelectronics NV on September 19, 2024 and sell it today you would earn a total of 93.00 from holding STMicroelectronics NV or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMG Cleantech SA vs. STMicroelectronics NV
Performance |
| Timeline |
| CMG Cleantech SA |
| STMicroelectronics |
CMG Cleantech and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMG Cleantech and STMicroelectronics
The main advantage of trading using opposite CMG Cleantech and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMG Cleantech 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.| CMG Cleantech vs. EPC Groupe | CMG Cleantech vs. Groupe Sfpi | CMG Cleantech vs. Baikowski SASU | CMG Cleantech vs. NSE SA |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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