Correlation Between STMicroelectronics and AP Møller
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and AP Møller 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 AP Møller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and AP Mller , you can compare the effects of market volatilities on STMicroelectronics and AP Møller 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 AP Møller. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and AP Møller.
Diversification Opportunities for STMicroelectronics and AP Møller
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STMicroelectronics and DP4B is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Møller 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 AP Møller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Møller has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and AP Møller go up and down completely randomly.
Pair Corralation between STMicroelectronics and AP Møller
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the AP Møller. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.73 times less risky than AP Møller. The stock trades about -0.01 of its potential returns per unit of risk. The AP Mller is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 128,105 in AP Mller on September 14, 2024 and sell it today you would earn a total of 29,345 from holding AP Mller or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. AP Mller
Performance |
| Timeline |
| STMicroelectronics |
| AP Møller |
STMicroelectronics and AP Møller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and AP Møller
The main advantage of trading using opposite STMicroelectronics and AP Møller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, AP Møller 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 AP Møller will offset losses from the drop in AP Møller's long position.| STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Superior Plus Corp | STMicroelectronics vs. SIVERS SEMICONDUCTORS AB |
| AP Møller vs. DIVERSIFIED ROYALTY | AP Møller vs. HK Electric Investments | AP Møller vs. ECHO INVESTMENT ZY | AP Møller vs. STMicroelectronics NV |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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