Correlation Between FLOW TRADERS and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and STMicroelectronics NV, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and STMicroelectronics.
Diversification Opportunities for FLOW TRADERS and STMicroelectronics
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between FLOW and STMicroelectronics is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and STMicroelectronics go up and down completely randomly.
Pair Corralation between FLOW TRADERS and STMicroelectronics
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.86 times more return on investment than STMicroelectronics. However, FLOW TRADERS LTD is 1.16 times less risky than STMicroelectronics. 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 1,884 in FLOW TRADERS LTD on October 14, 2024 and sell it today you would earn a total of 438.00 from holding FLOW TRADERS LTD or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. STMicroelectronics NV
Performance |
| Timeline |
| FLOW TRADERS LTD |
| STMicroelectronics |
FLOW TRADERS and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and STMicroelectronics
The main advantage of trading using opposite FLOW TRADERS and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. CN MODERN DAIRY | FLOW TRADERS vs. Thai Beverage Public | FLOW TRADERS vs. Alfa Financial Software | FLOW TRADERS vs. PT Wintermar Offshore |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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