Correlation Between STMicroelectronics and China DatangRenewable
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and China DatangRenewable 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 China DatangRenewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and China Datang, you can compare the effects of market volatilities on STMicroelectronics and China DatangRenewable 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 China DatangRenewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and China DatangRenewable.
Diversification Opportunities for STMicroelectronics and China DatangRenewable
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STMicroelectronics and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China DatangRenewable 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 China DatangRenewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China DatangRenewable has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and China DatangRenewable go up and down completely randomly.
Pair Corralation between STMicroelectronics and China DatangRenewable
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the China DatangRenewable. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.96 times less risky than China DatangRenewable. The stock trades about -0.03 of its potential returns per unit of risk. The China Datang is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14.00 in China Datang on October 14, 2024 and sell it today you would earn a total of 10.00 from holding China Datang or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. China Datang
Performance |
| Timeline |
| STMicroelectronics |
| China DatangRenewable |
STMicroelectronics and China DatangRenewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and China DatangRenewable
The main advantage of trading using opposite STMicroelectronics and China DatangRenewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, China DatangRenewable 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 China DatangRenewable will offset losses from the drop in China DatangRenewable's long position.| STMicroelectronics vs. FLOW TRADERS LTD | STMicroelectronics vs. H2O Retailing | STMicroelectronics vs. CARSALESCOM | STMicroelectronics vs. TRADELINK ELECTRON |
| China DatangRenewable vs. Air New Zealand | China DatangRenewable vs. STMicroelectronics NV | China DatangRenewable vs. Nanjing Panda Electronics | China DatangRenewable vs. Samsung Electronics Co |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |