Correlation Between Kering SA and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Kering SA 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 Kering SA and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kering SA and STMICROELECTRONICS, you can compare the effects of market volatilities on Kering SA 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 Kering SA with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kering SA and STMICROELECTRONICS.
Diversification Opportunities for Kering SA and STMICROELECTRONICS
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kering and STMICROELECTRONICS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and Kering SA 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 Kering 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 Kering SA i.e., Kering SA and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Kering SA and STMICROELECTRONICS
Assuming the 90 days trading horizon Kering SA is expected to generate 1.36 times more return on investment than STMICROELECTRONICS. However, Kering SA is 1.36 times more volatile than STMICROELECTRONICS. It trades about 0.24 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.03 per unit of risk. If you would invest 21,130 in Kering SA on September 15, 2024 and sell it today you would earn a total of 2,975 from holding Kering SA or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kering SA vs. STMICROELECTRONICS
Performance |
| Timeline |
| Kering SA |
| STMICROELECTRONICS |
Kering SA and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kering SA and STMICROELECTRONICS
The main advantage of trading using opposite Kering SA and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kering SA 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's long position.| Kering SA vs. STMICROELECTRONICS | Kering SA vs. STORE ELECTRONIC | Kering SA vs. PT Bank Maybank | Kering SA vs. Benchmark Electronics |
| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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