Correlation Between STMICROELECTRONICS and GLG LIFE
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and GLG LIFE 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 GLG LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and GLG LIFE TECH, you can compare the effects of market volatilities on STMICROELECTRONICS and GLG LIFE 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 GLG LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and GLG LIFE.
Diversification Opportunities for STMICROELECTRONICS and GLG LIFE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between STMICROELECTRONICS and GLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and GLG LIFE TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG LIFE TECH 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 GLG LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG LIFE TECH has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and GLG LIFE go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and GLG LIFE
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the GLG LIFE. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 27.59 times less risky than GLG LIFE. The stock trades about -0.07 of its potential returns per unit of risk. The GLG LIFE TECH is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.30 in GLG LIFE TECH on September 14, 2024 and sell it today you would earn a total of 0.70 from holding GLG LIFE TECH or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. GLG LIFE TECH
Performance |
| Timeline |
| STMICROELECTRONICS |
| GLG LIFE TECH |
STMICROELECTRONICS and GLG LIFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and GLG LIFE
The main advantage of trading using opposite STMICROELECTRONICS and GLG LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, GLG LIFE 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 GLG LIFE will offset losses from the drop in GLG LIFE's long position.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |