Correlation Between STMicroelectronics and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and ECHO INVESTMENT 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 ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on STMicroelectronics and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and ECHO INVESTMENT.
Diversification Opportunities for STMicroelectronics and ECHO INVESTMENT
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and ECHO is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between STMicroelectronics and ECHO INVESTMENT
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the ECHO INVESTMENT. In addition to that, STMicroelectronics is 1.62 times more volatile than ECHO INVESTMENT ZY. It trades about -0.23 of its total potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.18 per unit of volatility. If you would invest 109.00 in ECHO INVESTMENT ZY on November 7, 2024 and sell it today you would lose (8.00) from holding ECHO INVESTMENT ZY or give up 7.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| STMicroelectronics |
| ECHO INVESTMENT ZY |
STMicroelectronics and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and ECHO INVESTMENT
The main advantage of trading using opposite STMicroelectronics and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| STMicroelectronics vs. JIAHUA STORES | STMicroelectronics vs. FAST RETAIL ADR | STMicroelectronics vs. TELECOM ITALIA | STMicroelectronics vs. China Communications Services |
| ECHO INVESTMENT vs. TROPHY GAMES DEV | ECHO INVESTMENT vs. TRADEDOUBLER AB SK | ECHO INVESTMENT vs. Scientific Games | ECHO INVESTMENT vs. Media and Games |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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