Correlation Between STMICROELECTRONICS and Ambev SA
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Ambev SA 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 Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Ambev SA, you can compare the effects of market volatilities on STMICROELECTRONICS and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Ambev SA.
Diversification Opportunities for STMICROELECTRONICS and Ambev SA
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMICROELECTRONICS and Ambev is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Ambev SA go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Ambev SA
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Ambev SA. In addition to that, STMICROELECTRONICS is 1.23 times more volatile than Ambev SA. It trades about -0.08 of its total potential returns per unit of risk. Ambev SA is currently generating about -0.03 per unit of volatility. If you would invest 238.00 in Ambev SA on September 23, 2024 and sell it today you would lose (43.00) from holding Ambev SA or give up 18.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Ambev SA
Performance |
| Timeline |
| STMICROELECTRONICS |
| Ambev SA |
STMICROELECTRONICS and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Ambev SA
The main advantage of trading using opposite STMICROELECTRONICS and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
| Ambev SA vs. KIMBALL ELECTRONICS | Ambev SA vs. TT Electronics PLC | Ambev SA vs. Meiko Electronics Co | Ambev SA vs. STMICROELECTRONICS |
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 Stocks Directory module to find actively traded stocks across global markets.
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