Correlation Between STMICROELECTRONICS and SIEM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and SIEM OFFSHORE 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 SIEM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and SIEM OFFSHORE NEW, you can compare the effects of market volatilities on STMICROELECTRONICS and SIEM OFFSHORE 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 SIEM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and SIEM OFFSHORE.
Diversification Opportunities for STMICROELECTRONICS and SIEM OFFSHORE
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMICROELECTRONICS and SIEM is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and SIEM OFFSHORE NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEM OFFSHORE NEW 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 SIEM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEM OFFSHORE NEW has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and SIEM OFFSHORE go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and SIEM OFFSHORE
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the SIEM OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, STMICROELECTRONICS is 2.66 times less risky than SIEM OFFSHORE. The stock trades about -0.19 of its potential returns per unit of risk. The SIEM OFFSHORE NEW is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 214.00 in SIEM OFFSHORE NEW on November 3, 2024 and sell it today you would lose (20.00) from holding SIEM OFFSHORE NEW or give up 9.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. SIEM OFFSHORE NEW
Performance |
| Timeline |
| STMICROELECTRONICS |
| SIEM OFFSHORE NEW |
STMICROELECTRONICS and SIEM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and SIEM OFFSHORE
The main advantage of trading using opposite STMICROELECTRONICS and SIEM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, SIEM OFFSHORE 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 SIEM OFFSHORE will offset losses from the drop in SIEM OFFSHORE's long position.| STMICROELECTRONICS vs. Cal Maine Foods | STMICROELECTRONICS vs. GWILLI FOOD | STMICROELECTRONICS vs. SYSTEMAIR AB | STMICROELECTRONICS vs. Air New Zealand |
| SIEM OFFSHORE vs. Enbridge | SIEM OFFSHORE vs. TC Energy | SIEM OFFSHORE vs. Cheniere Energy | SIEM OFFSHORE vs. Kinder Morgan |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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