Correlation Between STMICROELECTRONICS and Alfen NV
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Alfen NV 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 Alfen NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Alfen NV, you can compare the effects of market volatilities on STMICROELECTRONICS and Alfen NV 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 Alfen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Alfen NV.
Diversification Opportunities for STMICROELECTRONICS and Alfen NV
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STMICROELECTRONICS and Alfen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV 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 Alfen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen NV has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Alfen NV go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Alfen NV
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Alfen NV. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 1.53 times less risky than Alfen NV. The stock trades about -0.05 of its potential returns per unit of risk. The Alfen NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,181 in Alfen NV on October 31, 2024 and sell it today you would earn a total of 67.00 from holding Alfen NV or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Alfen NV
Performance |
| Timeline |
| STMICROELECTRONICS |
| Alfen NV |
STMICROELECTRONICS and Alfen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Alfen NV
The main advantage of trading using opposite STMICROELECTRONICS and Alfen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Alfen NV 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 Alfen NV will offset losses from the drop in Alfen NV's long position.| STMICROELECTRONICS vs. PPHE HOTEL GROUP | STMICROELECTRONICS vs. TRADEDOUBLER AB SK | STMICROELECTRONICS vs. H2O Retailing | STMICROELECTRONICS vs. SIDETRADE EO 1 |
| Alfen NV vs. TEN SQUARE GAMES | Alfen NV vs. CONTAGIOUS GAMING INC | Alfen NV vs. MOVIE GAMES SA | Alfen NV vs. Iridium Communications |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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