Correlation Between STMICROELECTRONICS and Société Générale
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS and Société Générale 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 Société Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Socit Gnrale Socit, you can compare the effects of market volatilities on STMICROELECTRONICS and Société Générale 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 Société Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Société Générale.
Diversification Opportunities for STMICROELECTRONICS and Société Générale
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMICROELECTRONICS and Société is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit 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 Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of STMICROELECTRONICS i.e., STMICROELECTRONICS and Société Générale go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Société Générale
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Société Générale. In addition to that, STMICROELECTRONICS is 1.19 times more volatile than Socit Gnrale Socit. It trades about -0.28 of its total potential returns per unit of risk. Socit Gnrale Socit is currently generating about 0.12 per unit of volatility. If you would invest 2,674 in Socit Gnrale Socit on October 9, 2024 and sell it today you would earn a total of 61.00 from holding Socit Gnrale Socit or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Socit Gnrale Socit
Performance |
| Timeline |
| STMICROELECTRONICS |
| Socit Gnrale Socit |
STMICROELECTRONICS and Société Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Société Générale
The main advantage of trading using opposite STMICROELECTRONICS and Société Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS position performs unexpectedly, Société Générale 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 Société Générale will offset losses from the drop in Société Générale's long position.| STMICROELECTRONICS vs. GOODYEAR T RUBBER | STMICROELECTRONICS vs. Plastic Omnium | STMICROELECTRONICS vs. Platinum Investment Management | STMICROELECTRONICS vs. The Yokohama Rubber |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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