Correlation Between STMicroelectronics and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Delta Electronics 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 Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Delta Electronics Public, you can compare the effects of market volatilities on STMicroelectronics and Delta Electronics 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 Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Delta Electronics.
Diversification Opportunities for STMicroelectronics and Delta Electronics
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and Delta is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Delta Electronics go up and down completely randomly.
Pair Corralation between STMicroelectronics and Delta Electronics
Assuming the 90 days horizon STMicroelectronics NV is expected to under-perform the Delta Electronics. But the stock apears to be less risky and, when comparing its historical volatility, STMicroelectronics NV is 1.29 times less risky than Delta Electronics. The stock trades about -0.07 of its potential returns per unit of risk. The Delta Electronics Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 256.00 in Delta Electronics Public on November 7, 2024 and sell it today you would earn a total of 102.00 from holding Delta Electronics Public or generate 39.84% 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. Delta Electronics Public
Performance |
| Timeline |
| STMicroelectronics |
| Delta Electronics Public |
STMicroelectronics and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Delta Electronics
The main advantage of trading using opposite STMicroelectronics and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.| STMicroelectronics vs. JIAHUA STORES | STMicroelectronics vs. FAST RETAIL ADR | STMicroelectronics vs. TELECOM ITALIA | STMicroelectronics vs. China Communications Services |
| Delta Electronics vs. CVB Financial Corp | Delta Electronics vs. CHIBA BANK | Delta Electronics vs. Synovus Financial Corp | Delta Electronics vs. Direct Line Insurance |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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