Correlation Between ZCCM Investments and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both ZCCM Investments 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 ZCCM Investments and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZCCM Investments Holdings and STMicroelectronics NV, you can compare the effects of market volatilities on ZCCM Investments 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 ZCCM Investments with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZCCM Investments and STMicroelectronics.
Diversification Opportunities for ZCCM Investments and STMicroelectronics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZCCM and STMicroelectronics is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ZCCM Investments Holdings and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and ZCCM Investments 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 ZCCM Investments Holdings 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 ZCCM Investments i.e., ZCCM Investments and STMicroelectronics go up and down completely randomly.
Pair Corralation between ZCCM Investments and STMicroelectronics
Assuming the 90 days trading horizon ZCCM Investments Holdings is expected to generate 2.9 times more return on investment than STMicroelectronics. However, ZCCM Investments is 2.9 times more volatile than STMicroelectronics NV. It trades about 0.04 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.03 per unit of risk. If you would invest 123.00 in ZCCM Investments Holdings on August 30, 2024 and sell it today you would earn a total of 16.00 from holding ZCCM Investments Holdings or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.02% |
| Values | Daily Returns |
ZCCM Investments Holdings vs. STMicroelectronics NV
Performance |
| Timeline |
| ZCCM Investments Holdings |
| STMicroelectronics |
ZCCM Investments and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZCCM Investments and STMicroelectronics
The main advantage of trading using opposite ZCCM Investments and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZCCM Investments 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.| ZCCM Investments vs. TotalEnergies EP Gabon | ZCCM Investments vs. Robertet SA | ZCCM Investments vs. EPC Groupe | ZCCM Investments vs. Manitou BF 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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