Correlation Between STMicroelectronics and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Origin Agritech 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 Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Origin Agritech, you can compare the effects of market volatilities on STMicroelectronics and Origin Agritech 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 Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Origin Agritech.
Diversification Opportunities for STMicroelectronics and Origin Agritech
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STMicroelectronics and Origin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech 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 Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Origin Agritech go up and down completely randomly.
Pair Corralation between STMicroelectronics and Origin Agritech
Assuming the 90 days horizon STMicroelectronics NV is expected to generate 0.57 times more return on investment than Origin Agritech. However, STMicroelectronics NV is 1.75 times less risky than Origin Agritech. It trades about 0.06 of its potential returns per unit of risk. Origin Agritech is currently generating about -0.2 per unit of risk. If you would invest 2,420 in STMicroelectronics NV on October 25, 2024 and sell it today you would earn a total of 48.00 from holding STMicroelectronics NV or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Origin Agritech
Performance |
| Timeline |
| STMicroelectronics |
| Origin Agritech |
STMicroelectronics and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Origin Agritech
The main advantage of trading using opposite STMicroelectronics and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.| STMicroelectronics vs. GameStop Corp | STMicroelectronics vs. Games Workshop Group | STMicroelectronics vs. Geely Automobile Holdings | STMicroelectronics vs. MAVEN WIRELESS SWEDEN |
| Origin Agritech vs. Richardson Electronics | Origin Agritech vs. KIMBALL ELECTRONICS | Origin Agritech vs. Japan Tobacco | Origin Agritech vs. STMicroelectronics NV |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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