Correlation Between Schweizer Electronic and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Schweizer Electronic 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 Schweizer Electronic and STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schweizer Electronic AG and STMICROELECTRONICS, you can compare the effects of market volatilities on Schweizer Electronic 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 Schweizer Electronic with a short position of STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizer Electronic and STMICROELECTRONICS.
Diversification Opportunities for Schweizer Electronic and STMICROELECTRONICS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schweizer and STMICROELECTRONICS is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Schweizer Electronic AG and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS and Schweizer Electronic 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 Schweizer Electronic AG 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 Schweizer Electronic i.e., Schweizer Electronic and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Schweizer Electronic and STMICROELECTRONICS
Assuming the 90 days horizon Schweizer Electronic AG is expected to under-perform the STMICROELECTRONICS. In addition to that, Schweizer Electronic is 1.32 times more volatile than STMICROELECTRONICS. It trades about -0.11 of its total potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.07 per unit of volatility. If you would invest 4,137 in STMICROELECTRONICS on September 14, 2024 and sell it today you would lose (1,635) from holding STMICROELECTRONICS or give up 39.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schweizer Electronic AG vs. STMICROELECTRONICS
Performance |
| Timeline |
| Schweizer Electronic |
| STMICROELECTRONICS |
Schweizer Electronic and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schweizer Electronic and STMICROELECTRONICS
The main advantage of trading using opposite Schweizer Electronic and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizer Electronic 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.| Schweizer Electronic vs. Benchmark Electronics | Schweizer Electronic vs. Superior Plus Corp | Schweizer Electronic vs. SIVERS SEMICONDUCTORS AB | Schweizer Electronic vs. Norsk Hydro ASA |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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