Correlation Between Octopus Apollo and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Octopus Apollo 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 Octopus Apollo and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Octopus Apollo VCT and STMicroelectronics NV, you can compare the effects of market volatilities on Octopus Apollo 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 Octopus Apollo with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Octopus Apollo and STMicroelectronics.
Diversification Opportunities for Octopus Apollo and STMicroelectronics
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Octopus and STMicroelectronics is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Octopus Apollo VCT and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Octopus Apollo 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 Octopus Apollo VCT 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 Octopus Apollo i.e., Octopus Apollo and STMicroelectronics go up and down completely randomly.
Pair Corralation between Octopus Apollo and STMicroelectronics
Assuming the 90 days trading horizon Octopus Apollo is expected to generate 39.32 times less return on investment than STMicroelectronics. But when comparing it to its historical volatility, Octopus Apollo VCT is 2.59 times less risky than STMicroelectronics. It trades about 0.01 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,406 in STMicroelectronics NV on November 28, 2024 and sell it today you would earn a total of 172.00 from holding STMicroelectronics NV or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Octopus Apollo VCT vs. STMicroelectronics NV
Performance |
| Timeline |
| Octopus Apollo VCT |
| STMicroelectronics |
Octopus Apollo and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Octopus Apollo and STMicroelectronics
The main advantage of trading using opposite Octopus Apollo and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Octopus Apollo 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.| Octopus Apollo vs. URU Metals | Octopus Apollo vs. Eastman Chemical Co | Octopus Apollo vs. Naturhouse Health SA | Octopus Apollo vs. Fulcrum Metals PLC |
| STMicroelectronics vs. Host Hotels Resorts | STMicroelectronics vs. Naked Wines plc | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Hilton Food Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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