Correlation Between STMICROELECTRONICS and Schweizer Electronic
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Schweizer Electronic 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 Schweizer Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Schweizer Electronic AG, you can compare the effects of market volatilities on STMICROELECTRONICS and Schweizer Electronic 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 Schweizer Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Schweizer Electronic.
Diversification Opportunities for STMICROELECTRONICS and Schweizer Electronic
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMICROELECTRONICS and Schweizer is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Schweizer Electronic AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweizer 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 Schweizer Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweizer Electronic has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Schweizer Electronic go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Schweizer Electronic
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 0.76 times more return on investment than Schweizer Electronic. However, STMICROELECTRONICS is 1.32 times less risky than Schweizer Electronic. It trades about -0.07 of its potential returns per unit of risk. Schweizer Electronic AG is currently generating about -0.11 per unit of risk. If you would invest 4,137 in STMICROELECTRONICS on September 14, 2024 and sell it today you would lose (1,635) from holding STMICROELECTRONICS or give up 39.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Schweizer Electronic AG
Performance |
| Timeline |
| STMICROELECTRONICS |
| Schweizer Electronic |
STMICROELECTRONICS and Schweizer Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Schweizer Electronic
The main advantage of trading using opposite STMICROELECTRONICS and Schweizer Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Schweizer Electronic 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 Schweizer Electronic will offset losses from the drop in Schweizer Electronic's long position.| STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc | STMICROELECTRONICS vs. Apple Inc |
| Schweizer Electronic vs. Benchmark Electronics | Schweizer Electronic vs. Superior Plus Corp | Schweizer Electronic vs. SIVERS SEMICONDUCTORS AB | Schweizer Electronic vs. Norsk Hydro ASA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |