Correlation Between STMICROELECTRONICS and CELLULAR GOODS
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and CELLULAR GOODS 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 CELLULAR GOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and CELLULAR GOODS LS, you can compare the effects of market volatilities on STMICROELECTRONICS and CELLULAR GOODS 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 CELLULAR GOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and CELLULAR GOODS.
Diversification Opportunities for STMICROELECTRONICS and CELLULAR GOODS
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMICROELECTRONICS and CELLULAR is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and CELLULAR GOODS LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CELLULAR GOODS LS 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 CELLULAR GOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CELLULAR GOODS LS has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and CELLULAR GOODS go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and CELLULAR GOODS
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the CELLULAR GOODS. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 12.44 times less risky than CELLULAR GOODS. The stock trades about -0.03 of its potential returns per unit of risk. The CELLULAR GOODS LS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.05 in CELLULAR GOODS LS on October 12, 2024 and sell it today you would earn a total of 0.00 from holding CELLULAR GOODS LS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
STMICROELECTRONICS vs. CELLULAR GOODS LS
Performance |
| Timeline |
| STMICROELECTRONICS |
| CELLULAR GOODS LS |
STMICROELECTRONICS and CELLULAR GOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and CELLULAR GOODS
The main advantage of trading using opposite STMICROELECTRONICS and CELLULAR GOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, CELLULAR GOODS 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 CELLULAR GOODS will offset losses from the drop in CELLULAR GOODS's long position.| STMICROELECTRONICS vs. MCEWEN MINING INC | STMICROELECTRONICS vs. INTERSHOP Communications Aktiengesellschaft | STMICROELECTRONICS vs. Spirent Communications plc | STMICROELECTRONICS vs. Harmony Gold Mining |
| CELLULAR GOODS vs. Richardson Electronics | CELLULAR GOODS vs. STMICROELECTRONICS | CELLULAR GOODS vs. KIMBALL ELECTRONICS | CELLULAR GOODS vs. Samsung Electronics Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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