Correlation Between STMICROELECTRONICS and PEPTONIC MEDICAL
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and PEPTONIC MEDICAL 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 STMICROELECTRONICS and PEPTONIC MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and PEPTONIC MEDICAL, you can compare the effects of market volatilities on STMICROELECTRONICS and PEPTONIC MEDICAL 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 STMICROELECTRONICS with a short position of PEPTONIC MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and PEPTONIC MEDICAL.
Diversification Opportunities for STMICROELECTRONICS and PEPTONIC MEDICAL
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between STMICROELECTRONICS and PEPTONIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and PEPTONIC MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPTONIC MEDICAL and STMICROELECTRONICS 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 STMICROELECTRONICS are associated (or correlated) with PEPTONIC MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPTONIC MEDICAL has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and PEPTONIC MEDICAL go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and PEPTONIC MEDICAL
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the PEPTONIC MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 27.57 times less risky than PEPTONIC MEDICAL. The stock trades about -0.02 of its potential returns per unit of risk. The PEPTONIC MEDICAL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.24 in PEPTONIC MEDICAL on October 11, 2024 and sell it today you would lose (0.22) from holding PEPTONIC MEDICAL or give up 91.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. PEPTONIC MEDICAL
Performance |
| Timeline |
| STMICROELECTRONICS |
| PEPTONIC MEDICAL |
STMICROELECTRONICS and PEPTONIC MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and PEPTONIC MEDICAL
The main advantage of trading using opposite STMICROELECTRONICS and PEPTONIC MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, PEPTONIC MEDICAL 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 PEPTONIC MEDICAL will offset losses from the drop in PEPTONIC MEDICAL's long position.| STMICROELECTRONICS vs. BOSTON BEER A | STMICROELECTRONICS vs. Hitachi Construction Machinery | STMICROELECTRONICS vs. United Breweries Co | STMICROELECTRONICS vs. National Beverage Corp |
| PEPTONIC MEDICAL vs. STMICROELECTRONICS | PEPTONIC MEDICAL vs. KIMBALL ELECTRONICS | PEPTONIC MEDICAL vs. UET United Electronic | PEPTONIC MEDICAL vs. MidCap Financial Investment |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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