Correlation Between STMicroelectronics and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Neinor Homes 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 Neinor Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Neinor Homes SA, you can compare the effects of market volatilities on STMicroelectronics and Neinor Homes 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 Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Neinor Homes.
Diversification Opportunities for STMicroelectronics and Neinor Homes
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and Neinor is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA 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 NV are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Neinor Homes go up and down completely randomly.
Pair Corralation between STMicroelectronics and Neinor Homes
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Neinor Homes. In addition to that, STMicroelectronics is 1.22 times more volatile than Neinor Homes SA. It trades about -0.03 of its total potential returns per unit of risk. Neinor Homes SA is currently generating about 0.09 per unit of volatility. If you would invest 725.00 in Neinor Homes SA on August 25, 2024 and sell it today you would earn a total of 805.00 from holding Neinor Homes SA or generate 111.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
STMicroelectronics NV vs. Neinor Homes SA
Performance |
| Timeline |
| STMicroelectronics |
| Neinor Homes SA |
STMicroelectronics and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Neinor Homes
The main advantage of trading using opposite STMicroelectronics and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| STMicroelectronics vs. AOI Electronics Co | STMicroelectronics vs. AAC TECHNOLOGHLDGADR | STMicroelectronics vs. Electronic Arts | STMicroelectronics vs. FARO Technologies |
| Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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