Correlation Between STMICROELECTRONICS and KOOL2PLAY
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and KOOL2PLAY 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 KOOL2PLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and KOOL2PLAY SA ZY, you can compare the effects of market volatilities on STMICROELECTRONICS and KOOL2PLAY 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 KOOL2PLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and KOOL2PLAY.
Diversification Opportunities for STMICROELECTRONICS and KOOL2PLAY
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STMICROELECTRONICS and KOOL2PLAY is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and KOOL2PLAY SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOOL2PLAY SA ZY 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 KOOL2PLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOOL2PLAY SA ZY has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and KOOL2PLAY go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and KOOL2PLAY
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the KOOL2PLAY. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 2.9 times less risky than KOOL2PLAY. The stock trades about -0.07 of its potential returns per unit of risk. The KOOL2PLAY SA ZY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17.00 in KOOL2PLAY SA ZY on October 9, 2024 and sell it today you would earn a total of 0.00 from holding KOOL2PLAY SA ZY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.37% |
| Values | Daily Returns |
STMICROELECTRONICS vs. KOOL2PLAY SA ZY
Performance |
| Timeline |
| STMICROELECTRONICS |
| KOOL2PLAY SA ZY |
STMICROELECTRONICS and KOOL2PLAY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and KOOL2PLAY
The main advantage of trading using opposite STMICROELECTRONICS and KOOL2PLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, KOOL2PLAY 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 KOOL2PLAY will offset losses from the drop in KOOL2PLAY's long position.| STMICROELECTRONICS vs. 24SEVENOFFICE GROUP AB | STMICROELECTRONICS vs. VIAPLAY GROUP AB | STMICROELECTRONICS vs. ADDUS HOMECARE | STMICROELECTRONICS vs. KENEDIX OFFICE INV |
| KOOL2PLAY vs. Ubisoft Entertainment SA | KOOL2PLAY vs. TOWNSQUARE MEDIA INC | KOOL2PLAY vs. Nexstar Media Group | KOOL2PLAY vs. Air Lease |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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