Correlation Between STMicroelectronics and SOLSTAD OFFSHORE
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and SOLSTAD OFFSHORE NK, you can compare the effects of market volatilities on STMicroelectronics and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and SOLSTAD OFFSHORE.
Diversification Opportunities for STMicroelectronics and SOLSTAD OFFSHORE
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and SOLSTAD is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and SOLSTAD OFFSHORE go up and down completely randomly.
Pair Corralation between STMicroelectronics and SOLSTAD OFFSHORE
Assuming the 90 days horizon STMicroelectronics is expected to generate 37.49 times less return on investment than SOLSTAD OFFSHORE. But when comparing it to its historical volatility, STMicroelectronics NV is 2.39 times less risky than SOLSTAD OFFSHORE. It trades about 0.02 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 270.00 in SOLSTAD OFFSHORE NK on September 4, 2024 and sell it today you would earn a total of 88.00 from holding SOLSTAD OFFSHORE NK or generate 32.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
STMicroelectronics NV vs. SOLSTAD OFFSHORE NK
Performance |
| Timeline |
| STMicroelectronics |
| SOLSTAD OFFSHORE |
STMicroelectronics and SOLSTAD OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and SOLSTAD OFFSHORE
The main advantage of trading using opposite STMicroelectronics and SOLSTAD OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE will offset losses from the drop in SOLSTAD OFFSHORE's long position.| STMicroelectronics vs. Japan Tobacco | STMicroelectronics vs. MCEWEN MINING INC | STMicroelectronics vs. BURLINGTON STORES | STMicroelectronics vs. QURATE RETAIL INC |
| SOLSTAD OFFSHORE vs. Wilh Wilhelmsen Holding | SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. NMI Holdings | SOLSTAD OFFSHORE vs. Origin Agritech |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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