Correlation Between STMICROELECTRONICS and UET United
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and UET United 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 UET United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and UET United Electronic, you can compare the effects of market volatilities on STMICROELECTRONICS and UET United 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 UET United. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and UET United.
Diversification Opportunities for STMICROELECTRONICS and UET United
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between STMICROELECTRONICS and UET is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and UET United Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UET United Electronic 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 UET United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UET United Electronic has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and UET United go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and UET United
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 1.4 times more return on investment than UET United. However, STMICROELECTRONICS is 1.4 times more volatile than UET United Electronic. It trades about 0.19 of its potential returns per unit of risk. UET United Electronic is currently generating about -0.05 per unit of risk. If you would invest 2,380 in STMICROELECTRONICS on November 27, 2024 and sell it today you would earn a total of 284.00 from holding STMICROELECTRONICS or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. UET United Electronic
Performance |
| Timeline |
| STMICROELECTRONICS |
| UET United Electronic |
STMICROELECTRONICS and UET United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and UET United
The main advantage of trading using opposite STMICROELECTRONICS and UET United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, UET United 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 UET United will offset losses from the drop in UET United's long position.| STMICROELECTRONICS vs. DETALION GAMES SA | STMICROELECTRONICS vs. Platinum Investment Management | STMICROELECTRONICS vs. AGNC Investment Corp | STMICROELECTRONICS vs. CONTAGIOUS GAMING INC |
| UET United vs. REINET INVESTMENTS SCA | UET United vs. PennyMac Mortgage Investment | UET United vs. MidCap Financial Investment | UET United vs. SEI Investments |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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