Correlation Between STMicroelectronics and ASOS PLC
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and ASOS PLC 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 ASOS PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and ASOS PLC, you can compare the effects of market volatilities on STMicroelectronics and ASOS PLC 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 ASOS PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and ASOS PLC.
Diversification Opportunities for STMicroelectronics and ASOS PLC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and ASOS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and ASOS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS PLC 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 ASOS PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS PLC has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and ASOS PLC go up and down completely randomly.
Pair Corralation between STMicroelectronics and ASOS PLC
Assuming the 90 days horizon STMicroelectronics is expected to generate 5.59 times less return on investment than ASOS PLC. But when comparing it to its historical volatility, STMicroelectronics NV is 1.86 times less risky than ASOS PLC. It trades about 0.08 of its potential returns per unit of risk. ASOS PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 411.00 in ASOS PLC on September 14, 2024 and sell it today you would earn a total of 63.00 from holding ASOS PLC or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. ASOS PLC
Performance |
| Timeline |
| STMicroelectronics |
| ASOS PLC |
STMicroelectronics and ASOS PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and ASOS PLC
The main advantage of trading using opposite STMicroelectronics and ASOS PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, ASOS PLC 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 ASOS PLC will offset losses from the drop in ASOS PLC's long position.| STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Superior Plus Corp | STMicroelectronics vs. SIVERS SEMICONDUCTORS AB |
| ASOS PLC vs. ELECTRONIC ARTS | ASOS PLC vs. HF SINCLAIR P | ASOS PLC vs. Methode Electronics | ASOS PLC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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