Correlation Between STMicroelectronics and INTER CARS
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and INTER CARS 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 INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and INTER CARS SA, you can compare the effects of market volatilities on STMicroelectronics and INTER CARS 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 INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and INTER CARS.
Diversification Opportunities for STMicroelectronics and INTER CARS
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and INTER is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS 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 INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and INTER CARS go up and down completely randomly.
Pair Corralation between STMicroelectronics and INTER CARS
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the INTER CARS. In addition to that, STMicroelectronics is 1.04 times more volatile than INTER CARS SA. It trades about -0.03 of its total potential returns per unit of risk. INTER CARS SA is currently generating about 0.03 per unit of volatility. If you would invest 9,495 in INTER CARS SA on September 3, 2024 and sell it today you would earn a total of 1,705 from holding INTER CARS SA or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. INTER CARS SA
Performance |
| Timeline |
| STMicroelectronics |
| INTER CARS SA |
STMicroelectronics and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and INTER CARS
The main advantage of trading using opposite STMicroelectronics and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, INTER CARS 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 INTER CARS will offset losses from the drop in INTER CARS's long position.| STMicroelectronics vs. Align Technology | STMicroelectronics vs. Micron Technology | STMicroelectronics vs. Fukuyama Transporting Co | STMicroelectronics vs. FANDIFI TECHNOLOGY P |
| INTER CARS vs. MOVIE GAMES SA | INTER CARS vs. FRACTAL GAMING GROUP | INTER CARS vs. Constellation Software | INTER CARS vs. Alfa Financial Software |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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