Correlation Between STMICROELECTRONICS and POSBO UNSPADRS/20YC1
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on STMICROELECTRONICS and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and POSBO UNSPADRS/20YC1.
Diversification Opportunities for STMICROELECTRONICS and POSBO UNSPADRS/20YC1
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMICROELECTRONICS and POSBO is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS/20YC1 has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and POSBO UNSPADRS/20YC1 go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and POSBO UNSPADRS/20YC1
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the POSBO UNSPADRS/20YC1. In addition to that, STMICROELECTRONICS is 2.28 times more volatile than POSBO UNSPADRS20YC1. It trades about -0.19 of its total potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.07 per unit of volatility. If you would invest 1,070 in POSBO UNSPADRS20YC1 on November 3, 2024 and sell it today you would earn a total of 20.00 from holding POSBO UNSPADRS20YC1 or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. POSBO UNSPADRS20YC1
Performance |
| Timeline |
| STMICROELECTRONICS |
| POSBO UNSPADRS/20YC1 |
STMICROELECTRONICS and POSBO UNSPADRS/20YC1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and POSBO UNSPADRS/20YC1
The main advantage of trading using opposite STMICROELECTRONICS and POSBO UNSPADRS/20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 will offset losses from the drop in POSBO UNSPADRS/20YC1's long position.| STMICROELECTRONICS vs. Cal Maine Foods | STMICROELECTRONICS vs. GWILLI FOOD | STMICROELECTRONICS vs. SYSTEMAIR AB | STMICROELECTRONICS vs. Air New Zealand |
| POSBO UNSPADRS/20YC1 vs. OPKO HEALTH | POSBO UNSPADRS/20YC1 vs. Ares Management Corp | POSBO UNSPADRS/20YC1 vs. CEOTRONICS | POSBO UNSPADRS/20YC1 vs. Cardinal Health |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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