Correlation Between STMicroelectronics and FORTEC Elektronik
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and FORTEC Elektronik 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 FORTEC Elektronik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and FORTEC Elektronik AG, you can compare the effects of market volatilities on STMicroelectronics and FORTEC Elektronik 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 FORTEC Elektronik. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and FORTEC Elektronik.
Diversification Opportunities for STMicroelectronics and FORTEC Elektronik
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and FORTEC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and FORTEC Elektronik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTEC Elektronik 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 FORTEC Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTEC Elektronik has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and FORTEC Elektronik go up and down completely randomly.
Pair Corralation between STMicroelectronics and FORTEC Elektronik
Assuming the 90 days horizon STMicroelectronics is expected to generate 10.6 times less return on investment than FORTEC Elektronik. In addition to that, STMicroelectronics is 1.38 times more volatile than FORTEC Elektronik AG. It trades about 0.01 of its total potential returns per unit of risk. FORTEC Elektronik AG is currently generating about 0.2 per unit of volatility. If you would invest 1,830 in FORTEC Elektronik AG on October 30, 2024 and sell it today you would earn a total of 120.00 from holding FORTEC Elektronik AG or generate 6.56% 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. FORTEC Elektronik AG
Performance |
| Timeline |
| STMicroelectronics |
| FORTEC Elektronik |
STMicroelectronics and FORTEC Elektronik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and FORTEC Elektronik
The main advantage of trading using opposite STMicroelectronics and FORTEC Elektronik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, FORTEC Elektronik 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 FORTEC Elektronik will offset losses from the drop in FORTEC Elektronik's long position.| STMicroelectronics vs. LANDSEA GREEN MANAGEMENT | STMicroelectronics vs. Easy Software AG | STMicroelectronics vs. Sunny Optical Technology | STMicroelectronics vs. Check Point Software |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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