Correlation Between STMicroelectronics and Ubisoft Entertainment
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics and Ubisoft Entertainment 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 Ubisoft Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV and Ubisoft Entertainment SA, you can compare the effects of market volatilities on STMicroelectronics and Ubisoft Entertainment 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 Ubisoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Ubisoft Entertainment.
Diversification Opportunities for STMicroelectronics and Ubisoft Entertainment
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMicroelectronics and Ubisoft is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of STMicroelectronics i.e., STMicroelectronics and Ubisoft Entertainment go up and down completely randomly.
Pair Corralation between STMicroelectronics and Ubisoft Entertainment
Assuming the 90 days horizon STMicroelectronics NV is expected to generate 0.42 times more return on investment than Ubisoft Entertainment. However, STMicroelectronics NV is 2.38 times less risky than Ubisoft Entertainment. It trades about -0.04 of its potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about -0.05 per unit of risk. If you would invest 2,377 in STMicroelectronics NV on September 24, 2024 and sell it today you would lose (34.00) from holding STMicroelectronics NV or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV vs. Ubisoft Entertainment SA
Performance |
| Timeline |
| STMicroelectronics |
| Ubisoft Entertainment |
STMicroelectronics and Ubisoft Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Ubisoft Entertainment
The main advantage of trading using opposite STMicroelectronics and Ubisoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics position performs unexpectedly, Ubisoft Entertainment 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 Ubisoft Entertainment will offset losses from the drop in Ubisoft Entertainment's long position.| STMicroelectronics vs. NVIDIA | STMicroelectronics vs. Taiwan Semiconductor Manufacturing | STMicroelectronics vs. Broadcom | STMicroelectronics vs. Texas Instruments Incorporated |
| Ubisoft Entertainment vs. EMBARK EDUCATION LTD | Ubisoft Entertainment vs. Adtalem Global Education | Ubisoft Entertainment vs. WT OFFSHORE | Ubisoft Entertainment vs. Laureate Education |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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