Correlation Between STMicroelectronics and Chuangs China
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Chuangs China 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 Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Chuangs China Investments, you can compare the effects of market volatilities on STMicroelectronics and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Chuangs China.
Diversification Opportunities for STMicroelectronics and Chuangs China
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and Chuangs is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Chuangs China go up and down completely randomly.
Pair Corralation between STMicroelectronics and Chuangs China
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Chuangs China. In addition to that, STMicroelectronics is 4.2 times more volatile than Chuangs China Investments. It trades about -0.13 of its total potential returns per unit of risk. Chuangs China Investments is currently generating about 0.0 per unit of volatility. If you would invest 1.00 in Chuangs China Investments on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Chuangs China Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
STMicroelectronics NV vs. Chuangs China Investments
Performance |
| Timeline |
| STMicroelectronics |
| Chuangs China Investments |
STMicroelectronics and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Chuangs China
The main advantage of trading using opposite STMicroelectronics and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Intel |
| Chuangs China vs. Sun Hung Kai | Chuangs China vs. China Overseas Land | Chuangs China vs. CHINA VANKE TD | Chuangs China vs. Longfor Group Holdings |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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