Correlation Between STMicroelectronics and AEON STORES
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and AEON STORES 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 AEON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and AEON STORES, you can compare the effects of market volatilities on STMicroelectronics and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and AEON STORES.
Diversification Opportunities for STMicroelectronics and AEON STORES
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between STMicroelectronics and AEON is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and AEON STORES go up and down completely randomly.
Pair Corralation between STMicroelectronics and AEON STORES
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the AEON STORES. In addition to that, STMicroelectronics is 2.18 times more volatile than AEON STORES. It trades about -0.04 of its total potential returns per unit of risk. AEON STORES is currently generating about -0.04 per unit of volatility. If you would invest 6.05 in AEON STORES on October 26, 2024 and sell it today you would lose (0.15) from holding AEON STORES or give up 2.48% 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. AEON STORES
Performance |
| Timeline |
| STMicroelectronics |
| AEON STORES |
STMicroelectronics and AEON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and AEON STORES
The main advantage of trading using opposite STMicroelectronics and AEON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, AEON STORES 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 AEON STORES will offset losses from the drop in AEON STORES's long position.| STMicroelectronics vs. Gaming and Leisure | STMicroelectronics vs. Corsair Gaming | STMicroelectronics vs. ANTA SPORTS PRODUCT | STMicroelectronics vs. Games Workshop Group |
| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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