Correlation Between STMicroelectronics and Hyster-Yale Materials
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Hyster-Yale Materials 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 Hyster-Yale Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Hyster Yale Materials Handling, you can compare the effects of market volatilities on STMicroelectronics and Hyster-Yale Materials 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 Hyster-Yale Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Hyster-Yale Materials.
Diversification Opportunities for STMicroelectronics and Hyster-Yale Materials
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and Hyster-Yale is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials 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 Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Hyster-Yale Materials go up and down completely randomly.
Pair Corralation between STMicroelectronics and Hyster-Yale Materials
Assuming the 90 days horizon STMicroelectronics NV is expected to generate 0.55 times more return on investment than Hyster-Yale Materials. However, STMicroelectronics NV is 1.82 times less risky than Hyster-Yale Materials. It trades about -0.08 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about -0.08 per unit of risk. If you would invest 2,486 in STMicroelectronics NV on September 2, 2024 and sell it today you would lose (105.00) from holding STMicroelectronics NV or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Hyster Yale Materials Handling
Performance |
| Timeline |
| STMicroelectronics |
| Hyster Yale Materials |
STMicroelectronics and Hyster-Yale Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Hyster-Yale Materials
The main advantage of trading using opposite STMicroelectronics and Hyster-Yale Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Hyster-Yale Materials 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 Hyster-Yale Materials will offset losses from the drop in Hyster-Yale Materials' long position.The idea behind STMicroelectronics NV and Hyster Yale Materials Handling pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hyster-Yale Materials vs. Ming Le Sports | Hyster-Yale Materials vs. Lion One Metals | Hyster-Yale Materials vs. VIAPLAY GROUP AB | Hyster-Yale Materials vs. Cars Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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