Correlation Between STMicroelectronics and AMP
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and AMP 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 AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and AMP, you can compare the effects of market volatilities on STMicroelectronics and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and AMP.
Diversification Opportunities for STMicroelectronics and AMP
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and AMP is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and AMP go up and down completely randomly.
Pair Corralation between STMicroelectronics and AMP
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the AMP. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.17 times less risky than AMP. The stock trades about -0.04 of its potential returns per unit of risk. The AMP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 91.00 in AMP on September 13, 2024 and sell it today you would earn a total of 3.00 from holding AMP or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
STMicroelectronics NV vs. AMP
Performance |
| Timeline |
| STMicroelectronics |
| AMP |
STMicroelectronics and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and AMP
The main advantage of trading using opposite STMicroelectronics and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Superior Plus Corp | STMicroelectronics vs. SIVERS SEMICONDUCTORS AB |
| AMP vs. Broadridge Financial Solutions | AMP vs. Gold Road Resources | AMP vs. GOLD ROAD RES | AMP vs. Transportadora de Gas |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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