Correlation Between STMICROELECTRONICS and Polski Koncern
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Polski Koncern 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 Polski Koncern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Polski Koncern Naftowy, you can compare the effects of market volatilities on STMICROELECTRONICS and Polski Koncern 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 Polski Koncern. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Polski Koncern.
Diversification Opportunities for STMICROELECTRONICS and Polski Koncern
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMICROELECTRONICS and Polski is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy 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 Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Polski Koncern go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Polski Koncern
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Polski Koncern. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 1.22 times less risky than Polski Koncern. The stock trades about -0.06 of its potential returns per unit of risk. The Polski Koncern Naftowy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,025 in Polski Koncern Naftowy on September 12, 2024 and sell it today you would earn a total of 205.00 from holding Polski Koncern Naftowy or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Polski Koncern Naftowy
Performance |
| Timeline |
| STMICROELECTRONICS |
| Polski Koncern Naftowy |
STMICROELECTRONICS and Polski Koncern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Polski Koncern
The main advantage of trading using opposite STMICROELECTRONICS and Polski Koncern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Polski Koncern 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 Polski Koncern will offset losses from the drop in Polski Koncern's long position.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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