Correlation Between STMicroelectronics and Chiba Bank
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Chiba Bank 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 Chiba Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Chiba Bank, you can compare the effects of market volatilities on STMicroelectronics and Chiba Bank 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 Chiba Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Chiba Bank.
Diversification Opportunities for STMicroelectronics and Chiba Bank
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and Chiba is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Chiba Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank 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 Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Chiba Bank go up and down completely randomly.
Pair Corralation between STMicroelectronics and Chiba Bank
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Chiba Bank. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.38 times less risky than Chiba Bank. The stock trades about -0.01 of its potential returns per unit of risk. The Chiba Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 441.00 in Chiba Bank on September 13, 2024 and sell it today you would earn a total of 344.00 from holding Chiba Bank or generate 78.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Chiba Bank
Performance |
| Timeline |
| STMicroelectronics |
| Chiba Bank |
STMicroelectronics and Chiba Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Chiba Bank
The main advantage of trading using opposite STMicroelectronics and Chiba Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Chiba Bank 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 Chiba Bank will offset losses from the drop in Chiba Bank's long position.| STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Superior Plus Corp | STMicroelectronics vs. SIVERS SEMICONDUCTORS AB |
| Chiba Bank vs. ELECTRONIC ARTS | Chiba Bank vs. STMicroelectronics NV | Chiba Bank vs. Schweizer Electronic AG | Chiba Bank vs. Magic Software Enterprises |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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